Consumers who are Filing Bankruptcy in Colorado Springs have a choice between chapter 7 and 13, if their income qualifies them for both chapters. In the state of Colorado, consumers qualify for both chapters if their income is above the median, and they have the means to contribute a majority of their income to pay off their debts through chapter 13. To achieve this goal, the consumer should pass the means tests for both chapters.
A Clean Slate
Chapter 7 bankruptcy offers consumers a clean slate. It allows them to pay off all debts through the liquidation process. The consumer is not required to use any portion of their income to settle these debts. Proceeds generated through the sale of key assets, and properties are dispersed by a trustee to the consumer’s creditors. Once the bankruptcy is discharged, he or she is responsible for debts associated with assets such as their primary residence or automobile.
This chapter, typically, concludes within six months of filing. All exempt property belongs to the consumer after the bankruptcy. The court does not have a minimum debt value for filing for chapter 7.
A major disadvantage of this chapter is that the consumer does not get the opportunity to choose which assets are sold. In most cases, the primary residence and one automobile are exempt from liquidation. A consumer with a car collection may lose a majority if not all of these automobiles through bankruptcy. The same is true for rental property; the court views the property as an asset to generate funds for debt settlement and not an income source.
The automatic stay acquired through the bankruptcy is only temporary. If the consumer does not settle debt associated with a property facing foreclosure during the bankruptcy, the bank may complete the process once it concludes. Any co-signers which are also on the mortgage are responsible for the debt, unless they file their own bankruptcy claim. There is also an eight-year waiting period between bankruptcy claims. Any consumers who are interested in Filing Bankruptcy in Colorado Springs should contact David M. Koppa for further details.
