Stop Garnishment Through 2026 Bankruptcy

immediately upon filing, through the automated stay. You're behind on your mortgage and wish to keep your homeYour earnings is above the Colorado average and you do not pass the Chapter 7 means testYou have non-exempt equity you want to protect by paying its worth into a plan instead of losing the assetYou have debts that make it through Chapter 7 (certain taxes, some domestic support financial obligations) that you need structured time to payYou've submitted Chapter 7 too just recently to file again (see timing rules listed below)The means test under 11 U.S.C.

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

Many above-median filers still receive Chapter 7 after these reductions. or you might still have options depending upon the kind of financial obligation you bring (the methods test only applies to filers whose debts are mostly customer debts). Because the median earnings figures and IRS expense standards alter twice a year, the specific numbers that applied when a good friend or relative submitted may not use to your case today.

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

Important Legal Requirements for 2026 Bankruptcy

This is normally the deciding aspect for Colorado filers. Colorado's exemption statutes safeguard a set quantity of equity in your house, automobile, tools of trade, pension, and personal effects. If your equity in a possession surpasses the exemption, the trustee can offer it and pay you the exempt part however for the large majority of filers with typical equity levels, whatever is secured and nothing is sold.

This is often why higher-equity homeowners or entrepreneur choose Chapter 13 even when they may technically pass the Chapter 7 means test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee charge)Typically paid up front or quickly after filingFrequently paid through the plan over timeStays 10 years from filingStays 7 years from filingUnsecured financial obligation with no major properties at riskSaving a home, curing arrears, above-median income Chapter 13 Chapter 7 You normally should wait 8 years for another Chapter 7 discharge, but may qualify for Chapter 13 quicker (timing rules are technical and case-specific) Chapter 13, to cure the default and keep the car Typically Chapter 13, though eligibility depends on the "regular income" requirement Chapter 13's co-debtor stay offers protection Chapter 7 does notI invested years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

Submitting the wrong chapter, or filing properly but with a preventable error, can indicate losing property you could have kept or paying years longer than needed. If you're weighing Chapter 7 vs.

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A Step-By-Step 2026 Chapter 13 Filing

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

It depends upon your household earnings compared to Colorado's current mean figures for your family size, plus allowed expense reductions if you're above average. These figures alter two times a year, so a precise answer needs checking the chart in result on your filing date. Yes. Filing either Chapter 7 or Chapter 13 activates the automated stay, which instantly stops most wage garnishments, collection calls, and claims.

Chapter 13 deals court-enforced security that personal debt settlement does not supply, but it's a longer commitment. Personal bankruptcy law is fact-specific, and outcomes depend on your private scenarios.