It is quite difficult for you, as an individual to decide when to file bankruptcy. It is an option that is hard to decide upon. You can file for a bankruptcy when all you're your other methods of paying back your debts have failed and you are facing foreclosure. It is better that you start afresh with a bankruptcy instead of remaining overwhelmed and stressed under the increasing burden of loans and credits card debts with the help of debt advice . However, before you file a bankruptcy you should gather information about how the process works. Most of the times it is controlled by federal law, but state laws also feature prominently in some cases especially in your decision, which kind of bankruptcy to file. There are basically two kinds of bankruptcies that you can file, Chapter 7 and Chapter 13. Both basically aim at receiving the court’s order to put a stop to your liability to pay and your creditor's ability to collect and in turn discharge you of your entire burden and enable you to start afresh.
Colorado law and property exemptions
If you want to claim for property exemptions, then you can only ask for exemption of those properties that are listed in the Colorado state law. Unlike in some states, there is no provision for using federal exemptions. These exemption amounts keep changing and are found in the state code. Exemption can cover personal items too, such as clothing though the exact amount however may not matter. It is highly improbable that your bankruptcy trustees would sell them, as it is quite impractical and would not raise enough money to pay back your creditors. These property exemptions can affect your decision to file for a bankruptcy majorly. Say, all your major assets are exempt and your debts qualify for discharge, then Chapter 7 maybe the right choice for you. Let us observe this Chapter in details.
Chapter 7 bankruptcy
This is the most common type of bankruptcy and known as "straight bankruptcy". Usually this is filed when you have almost no assets to pay your creditors and most of your debts are dismissed. The key points of Chapter 7 are:
- You need to qualify for this based on your income and a means test that is set out in bankruptcy law.
- Your available assets, known as non-exempt property may be sold by the bankruptcy trustees in order to raise money to pay back your creditors.
- You can keep your exempt property which is kept away from your creditors reach.
- The chapter 7 discharge usually applies to the most common kinds of debts such as credit card debts and medical bills.
Mostly, Chapter 7 cases are "no-assets", which means you have nothing to pay your creditors after accounting the property exemptions.
If you have any source of income or assets through which you can afford to pay a portion of your debt then you can also use Chapter 13. You should consult with your attorney in order to decide what kind of bankruptcy is suitable for you.
Jason Holmes is a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like 'Credit Score The Quintessential Therapy for a Happy Pocket', Take Creditors and Collection Agencies to Small Claims Court' and, My Story- From Depression To a Smile'.