Financial Support for 2026 Chapter 13 Filers

immediately upon filing, through the automatic stay. You're behind on your home loan and desire to keep your homeYour income is above the Colorado median and you do not pass the Chapter 7 implies testYou have non-exempt equity you desire to protect by paying its worth into a plan rather of losing the assetYou have financial obligations that endure Chapter 7 (particular taxes, some domestic assistance arrears) that you need structured time to payYou have actually filed Chapter 7 too recently to file again (see timing rules below)The methods test under 11 U.S.C.

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Here's how it operates in plain terms: The U.S. Trustee Program publishes typical family earnings figures by family size, upgraded every April and November using Census Bureau data. If your average monthly income over the previous six months, annualized, falls at or below Colorado's typical for your home size, you pass the means test immediately and might submit Chapter 7.

Numerous above-median filers still certify for Chapter 7 after these deductions. or you might still have options depending on the type of financial obligation you bring (the ways test only applies to filers whose debts are mainly customer debts). Since the average income figures and internal revenue service expense standards alter two times a year, the specific numbers that applied when a good friend or relative submitted may not apply to your case today.

Chapter 13 isn't offered to everyone despite income there are statutory debt ceilings under 11 U.S.C. 109(e). As of the most recent inflation adjustment (effective April 1, 2025, through March 31, 2028), the limitations are separate for protected and unsecured financial obligation, in the low 7 figures integrated. There is active, bipartisan legislation pending in Congress that would raise and streamline these limits into a single combined limit worth watching if you're near the present ceiling, particularly if a large home loan is what's pushing you over.

Navigating Attorney Fees in 2026

This is typically the deciding element for Colorado filers. Colorado's exemption statutes protect a set quantity of equity in your house, vehicle, tools of trade, pension, and personal residential or commercial property. If your equity in a possession exceeds the exemption, the trustee can offer it and pay you the exempt part however for the large majority of filers with average equity levels, whatever is safeguarded and nothing is offered.

This is typically why higher-equity property owners or entrepreneur choose Chapter 13 even when they may technically pass the Chapter 7 implies test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus continuous trustee charge)Often paid up front or soon after filingFrequently paid through the strategy over timeStays ten years from filingStays 7 years from filingUnsecured financial obligation without any major properties at riskSaving a home, treating defaults, above-median income Chapter 13 Chapter 7 You usually need to wait 8 years for another Chapter 7 discharge, however may receive Chapter 13 earlier (timing rules are technical and case-specific) Chapter 13, to treat the default and keep the automobile Often Chapter 13, though eligibility depends on the "routine earnings" requirement Chapter 13's co-debtor stay offers defense Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which choices held up and which ones backfired.

Submitting the wrong chapter, or filing properly however with a preventable mistake, can indicate losing home you could have kept or paying years longer than essential. Every monetary circumstance is different, and the "best" chapter depends on numbers and truths distinct to your household. If you're weighing Chapter 7 vs.

Yes, in the majority of cases you can convert your case from Chapter 13 to Chapter 7 if your scenarios alter, based on certain limitations and court approval. Not necessarily. If you're existing on your mortgage and your home equity is within Colorado's exemption limitations, you can generally keep your home in Chapter 7.

It depends on your family earnings compared to Colorado's existing median figures for your household size, plus permitted expense reductions if you're above average. These figures alter two times a year, so a precise answer needs examining the chart in impact on your filing date. Yes. Filing either Chapter 7 or Chapter 13 sets off the automated stay, which immediately stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 deals court-enforced protection that personal financial obligation settlement doesn't supply, however it's a longer commitment. Bankruptcy law is fact-specific, and outcomes depend on your individual situations.