How to Qualify for Chapter 7 Bankruptcy in Colorado

Filing for Chapter 7 bankruptcy can provide a fresh financial start for those burdened with overwhelming debt. In Colorado, qualifying for this type of bankruptcy involves meeting specific criteria. Below is a detailed guide on how to qualify for Chapter 7 bankruptcy in Colorado.

1. Means Test

The first step in qualifying for Chapter 7 bankruptcy is passing the means test. This test is designed to determine whether your income is low enough to file for Chapter 7. In Colorado, the means test compares your average monthly income over the past six months to the state median income for a household of your size. If your income is below the median, you automatically qualify.

If your income is above the median, you will need to calculate your disposable income by deducting necessary living expenses from your gross income. If your disposable income is low enough, you may still qualify for Chapter 7 bankruptcy.

2. Residency Requirement

To file for Chapter 7 bankruptcy in Colorado, you must be a resident of the state. You should have lived in Colorado for at least 91 days before filing your petition. If you have moved to Colorado from another state, you may need to meet certain conditions based on the residency of the prior state.

3. Credit Counseling

Before filing for Chapter 7 bankruptcy, you are required to complete a credit counseling course from an approved agency. This course must be completed within six months before filing your bankruptcy petition. It aims to provide you with a better understanding of your financial situation and explore alternatives to bankruptcy.

4. No Prior Bankruptcy Filings

You must also meet the criteria related to prior bankruptcy filings. If you have filed for Chapter 7 bankruptcy in the past, you may not be eligible to file again for eight years from the date of your last discharge. If you filed for Chapter 13 bankruptcy previously, the waiting period is six years.

5. Valid Debt

In order to qualify, the debts you wish to discharge through Chapter 7 must be eligible for bankruptcy relief. Common dischargeable debts include credit card debts, medical bills, utility bills, and personal loans. However, certain debts like student loans, child support, and most tax debts are typically not dischargeable.

6. Filing Required Documents

When you decide to file for Chapter 7 bankruptcy, you will need to gather and file various documents with the bankruptcy court. This includes income statements, tax returns, a list of assets and liabilities, and the completed credit counseling certificate. Accurate documentation is critical to ensure your filing is processed smoothly.

7. Bankruptcy Attorney

While it is possible to file for Chapter 7 bankruptcy without an attorney, hiring a qualified bankruptcy attorney in Colorado can significantly improve your chances of a successful filing. They can provide guidance on the process, help ensure you meet all qualifications, and represent you in court if needed.

By understanding and fulfilling these requirements, you can successfully navigate the Chapter 7 bankruptcy filing process in Colorado and take steps toward regaining financial stability.