Is Chapter 7 in 2026

instantly upon filing, through the automated stay. You're behind on your mortgage and wish to keep your homeYour earnings is above the Colorado typical and you don't pass the Chapter 7 suggests testYou have non-exempt equity you want to secure by paying its value into a plan rather of losing the assetYou have debts that survive Chapter 7 (specific taxes, some domestic assistance financial obligations) that you need structured time to payYou've submitted Chapter 7 too recently to file again (see timing rules listed below)The ways test under 11 U.S.C.

apfsc.org

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

Many above-median filers still get approved for Chapter 7 after these reductions. or you may still have alternatives depending on the kind of debt you carry (the ways test only uses to filers whose debts are mainly customer financial obligations). Since the average income figures and IRS cost standards change twice a year, the precise numbers that applied when a friend or relative filed may not apply to your case today.

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

Should You Use Chapter 13 in 2026?

This is usually the choosing element for Colorado filers. Colorado's exemption statutes protect a set quantity of equity in your home, automobile, tools of trade, pension, and individual property. If your equity in an asset exceeds the exemption, the trustee can offer it and pay you the exempt portion but for the big bulk of filers with average equity levels, everything is safeguarded and absolutely nothing is sold.

This is often why higher-equity property owners or company owner pick Chapter 13 even when they might technically pass the Chapter 7 indicates test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee cost)Frequently paid up front or shortly after filingFrequently paid through the plan over timeStays 10 years from filingStays 7 years from filingUnsecured debt without any significant properties at riskSaving a home, treating financial obligations, above-median income Chapter 13 Chapter 7 You usually need to wait 8 years for another Chapter 7 discharge, but might qualify for Chapter 13 sooner (timing rules are technical and case-specific) Chapter 13, to cure the default and keep the cars and truck Typically Chapter 13, though eligibility depends upon the "regular earnings" requirement Chapter 13's co-debtor stay uses defense Chapter 7 does notI invested years administering cases as the Trustee -seeing direct which choices held up and which ones backfired.

Filing the incorrect chapter, or filing properly however with a preventable error, can indicate losing home you might have kept or paying years longer than essential. Every financial scenario is different, and the "right" chapter depends upon numbers and facts special to your household. If you're weighing Chapter 7 vs.

Yes, in many cases you can transform your case from Chapter 13 to Chapter 7 if your circumstances change, based on specific restrictions and court approval. Not always. If you're current on your mortgage and your home equity is within Colorado's exemption limits, you can usually keep your home in Chapter 7.

It depends upon your home income compared to Colorado's present typical figures for your household size, plus permitted expenditure deductions if you're above mean. These figures change two times a year, so a precise answer requires 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 claims.

Chapter 13 deals court-enforced protection that private financial obligation settlement does not offer, however it's a longer dedication. This article is for general informational purposes only and does not make up legal recommendations. Personal bankruptcy law is fact-specific, and results depend on your individual scenarios. Contact our workplace to discuss your circumstance directly.