In today’s slow economy, more U.S. consumers than ever are faced with impossible amounts of debt - and Colorado is no exception. Many Colorado residents, faced with crippling debt, are contemplating bankruptcy. In some instances, bankruptcy is a logical choice for consumers looking for a way to start over. However, many consumers are reluctant to file bankruptcy because they fear losing important assets like their home, car, or retirement benefits. Fortunately, the State of Colorado allows residents to keep their most important possessions while relieving themselves of crippling debt.
Colorado is one of the more bankruptcy-friendly states in the country. Unlike many other U.S. states, Colorado has relatively relaxed exemption rules for Chapter 7 bankruptcy filers. An exemption rule allows a person filing bankruptcy to keep certain assets ?out? of the bankruptcy. This means that filing bankruptcy can get you out from underneath unsecured debts without losing your vehicle or your home.
While Colorado’s exemptions are some of the most generous, all U.S. states have bankruptcy exemptions of some kind. This is because bankruptcy - which is legal the process of escaping insurmountable debt - is a constitutional right. The founders of the United States believed that every person is entitled to protection from creditors, so they were sure to include this right in the constitution. Since the U.S. has been founded, many famous people - such as Mark Twain, Walt Disney, Milton Hershey, and even former President Harry Truman - have taken advantage of the right to file bankruptcy.
The right to bankruptcy is important because it allows people to start over. Most people know that bankruptcy laws allow consumers to walk away from most unsecured debts. However, what many people don’t know is that bankruptcy is NOT meant to strip a person of all of their assets. Since a person’s home often represents a lifetime’s worth of work, Colorado bankruptcy exemptions allow residents who file bankruptcy to keep as much as $60,000 worth of equity in their home.
In addition to allowing consumers to exempt quite a bit of home equity, Colorado bankruptcy laws also allow residents to keep their vehicle. Logically, cars are an essential tool that consumers need in their daily lives, so they can be exempted. Other essentials - such as tools needed for work, retirement assets, and other basics like clothing - are also exempted during bankruptcy. Of course, there is a limit on the dollar value that can be exempted, so be sure to consult with a bankruptcy attorney.
However, while bankruptcy is designed to protect consumers, it’s NOT designed to be some sort of free pass that allows people to avoid their obligations. Homes, vehicles, and retirement assets are protected, but cash, second homes, non-retirement investments, and other valuables are not. When a consumer files bankruptcy, whatever cash they have will be taken and distributed to creditors. Valuables such as jewelry, art work, and even family heirlooms can also be taken and given to creditors. If you’re considering filing bankruptcy, you would be wise to discuss these matters with a bankruptcy attorney. There are some strategies that can be employed to protect valuables from seizure, but only an attorney can advise you on this process.
Bankruptcy is serious business, and anyone considering bankruptcy would be wise to speak with an attorney. A bankruptcy lawyer can advise you, help you prepare, and guide you through the bankruptcy process, and they can help you keep from making mistakes during your bankruptcy that could cause you to lose property or cause other legal problems.
Certainly, bankruptcy is a serious matter that is not for everyone. While bankruptcy allows consumers to start over, it’s not a legal trick that can be used to avoid responsibility. However, for many people who are facing overwhelming debts, bankruptcy is a logical financial choice. If you are a Colorado resident who is considering bankruptcy, you can rest assured that you can file without losing your home, vehicle, or retirement. Your next step is to contact a bankruptcy lawyer and discuss your options.
Author and Colorado native Jason Lancaster is a former finance manager. Since Jason is not an attorney, be sure to consult with a Colorado bankruptcy lawyer to learn more about exemption rules and your legal rights.