Deciding Between 13 and 7 for 2026

immediately upon filing, through the automated stay. You're behind on your home mortgage and wish to keep your homeYour earnings is above the Colorado mean and you don't pass the Chapter 7 means testYou have non-exempt equity you wish to protect by paying its worth into a strategy instead of losing the assetYou have debts that survive Chapter 7 (certain taxes, some domestic support arrears) that you need structured time to payYou have actually filed Chapter 7 too recently to submit again (see timing rules listed below)The means test under 11 U.S.C.

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Here's how it works in plain terms: The U.S. Trustee Program publishes average household income figures by family size, updated every April and November using Census Bureau data. If your typical month-to-month earnings over the prior 6 months, annualized, falls at or below Colorado's typical for your household size, you pass the methods test automatically and might file Chapter 7.

Numerous above-median filers still receive Chapter 7 after these reductions. or you might still have alternatives depending on the kind of financial obligation you bring (the methods test just applies to filers whose financial obligations are mostly consumer financial obligations). Since the median income figures and internal revenue service expense standards alter two times a year, the exact numbers that used when a buddy or relative filed might not apply to your case today.

Chapter 13 isn't available to everybody despite income there are statutory debt ceilings under 11 U.S.C. 109(e). Since the most current inflation modification (effective April 1, 2025, through March 31, 2028), the limits are separate for protected and unsecured debt, in the low 7 figures integrated. There is active, bipartisan legislation pending in Congress that would raise and simplify these limitations into a single combined threshold worth seeing if you're near the existing ceiling, especially if a big mortgage is what's pushing you over.

Step-By-Step 2026 Chapter 13 Filing

This is normally the choosing aspect for Colorado filers. Colorado's exemption statutes protect a set quantity of equity in your house, automobile, tools of trade, pension, and personal home. If your equity in a property exceeds the exemption, the trustee can sell it and pay you the exempt portion but for the big bulk of filers with typical equity levels, everything is protected and nothing is offered.

This is often why higher-equity property owners or entrepreneur pick Chapter 13 even when they may technically pass the Chapter 7 indicates test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus continuous trustee fee)Typically paid up front or shortly after filingFrequently paid through the strategy over timeStays ten years from filingStays 7 years from filingUnsecured debt without any major possessions at riskSaving a home, curing arrears, above-median income Chapter 13 Chapter 7 You typically must wait 8 years for another Chapter 7 discharge, however might get approved for Chapter 13 earlier (timing guidelines are technical and case-specific) Chapter 13, to treat the default and keep the car Frequently Chapter 13, though eligibility depends on the "routine earnings" requirement Chapter 13's co-debtor stay offers protection Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

Filing the wrong chapter, or filing properly however with a preventable mistake, can mean losing property you could have kept or paying years longer than essential. If you're weighing Chapter 7 vs.

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Navigating Between Chapter 7 and 7 for 2026

Yes, in most cases a lot of can convert your case from Chapter 13 to Chapter 7 if your circumstances changeSituations alter to certain restrictions specific limitations approval.

It depends upon your home income compared to Colorado's present typical figures for your home size, plus enabled expenditure deductions if you're above median. These figures change twice a year, so a precise response requires examining the chart in result on your filing date. Yes. Filing either Chapter 7 or Chapter 13 sets off the automated stay, which instantly stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 deals court-enforced protection that private financial obligation settlement doesn't provide, but it's a longer dedication. Personal bankruptcy law is fact-specific, and outcomes depend on your specific situations.