Five years ago, you purchased your dream home. Maybe it was in Denver, Aurora, Lakewood, Golden, Westminster, Arvada, Centennial, or Commerce City. Three bedrooms, two bathrooms, a basement, and a yard for your kids and dog. You always thought it would be your forever home. Then you lost your job and got behind on payments. Luckily, you were able to secure a new job. Everything seemed to be turning around. Then you heard a knock on your door and were served foreclosure paperwork.Your heart sunk. How could you save your home? There was no way you could pay back all of your missed payments immediately. There may be another way. Chapter 13 Bankruptcy can stop the foreclosure action in it tracks.
Chapter 13 bankruptcy allows individuals with regular income to develop a plan to repay all or part of their debts. Your qualified Colorado licensed attorney will submit a plan to the court to make regular monthly payment to creditors over three to five years. The monthly payments will be based upon your disposable income. Your disposable income is the amount of money you have remaining from your paycheck after paying you regular recurring bills like your mortgage, utilities, groceries, etc. These repayment plans will last from three to five years depending on your income compared to the income of similarly situated families in Colorado. Once you have completed the proposed Chapter 13 plan, many of your unsecured debts, even if they have not been fully repaid to the creditor, will be discharged.
During the pendency of the Chapter 13 plan, the law forbids creditors from starting or continuing collection efforts. Luckily, foreclosure is considered a collection effort. A Chapter 13 plan will immediately put a stop to the foreclosure activity. Although the foreclosure is halted, you will still have obligations to your mortgage company to keep your home.
First, you will have to continue, or begin, to make your regular mortgage payments. Although the bankruptcy will halt the foreclosure based on your past missed payments, it will not stop the mortgage company from taking additional actions should you fall behind again. Second, you will include your mortgage payment arrearages in the Chapter 13 plan. The court allows you to pay back what you owe the mortgage company over that three to five year period that you are making your regular monthly mortgage payments. During the Chapter 13 repayment period, you get to remain in your home.
The most important requirement to file a Chapter 13 bankruptcy is that you have a regular source of income with some disposable income. Without an income, you will not be able to make regular payments and your case will be dismissed. The second caveat is that you have to pay back your creditors as much as they would have been repaid if you had filed a Chapter 7 bankruptcy.
What Does That Mean?
In a Chapter 7 bankruptcy, your debts are discharged. However, the court may force you to sell certain possessions to pay back your creditors. The court allows you a certain amount of equity in your possessions that you get to keep, called exemptions, even after your debts are discharged. In Colorado, you are able to keep $75,000 of home equity if you are under 65 and $105,000 of home equity if you are over 65.
Let’s say you have $100,000 of equity in your home. If you filed a Chapter 7, the court would sell your home to pay off your creditors. The exemption would allow you to keep $75,000 from the sale of your home and the court would use the remaining $25,000 to pay off your creditors. That means that if you file a Chapter 13 bankruptcy, you would need to pay at least $25,000 to your creditors over the 36-60 months that you are following the Chapter 13 plan. Your minimum monthly payments would be at least $417 per month.
In order to determine if you need to file a Chapter 13 bankruptcy, you should contact a qualified Colorado bankruptcy attorney. There are many bankruptcy attorneys throughout the Denver Metro area, including Denver, Aurora, Arvada, Lakeland, Centennial, Castle Rock, Parker, Westminster, Brighton, and Broomfield, who offer free consultations. These experienced bankruptcy attorneys will be able to individually assess your situation and let you know whether a Chapter 13 bankruptcy is right for you.
Want A Fresh Start, LLC
343 W Roosevelt St #100
Phoenix, AZ 85003
Blog URL: https://wantafreshstart.com/can-bankruptcy-save-home-foreclosure-colorado/
Bankruptcy is nothing to ashamed of, which is why you need to make the best choices for you and for your family. Our offices represent hundreds of people like you throughout the Phoenix, AZ, Denver, CO, and Las Vegas, NV areas, and we know that people who get caught up in the avalanche of debt need relief that comes with dignity. In this article, we’ll talk about Chapter 7 eligibility through the means test, and the other factors that go into determining whether Chapter 7 bankruptcy is for you.
The means test helps determine if you are eligible for Chapter 7 bankruptcy. While Chapter 7 bankruptcy can remove debt accountability and give you a fresh start, it is often the case that many can (or must) successfully get out from under debt through Chapter 13 bankruptcy repayment plans instead. In fact, depending on the outcome of the means test, you may only be eligible for Chapter 13 repayment and not for Chapter 7 debt discharge.
Chapter 7 is not necessarily for everyone: you might be ineligible for Chapter 7, or better served using a Chapter 13 repayment plan. Check out our page on Chapter 7 Eligibility and Requirementsto learn more.
The basis for Chapter 7 filing is the means test. This test takes income, debts, expenses, and other financial information to determine your ability to repay debt. If you “flunk” (show that you can repay at least some of your debts) then you will need to file Chapter 13 bankruptcy under a repayment plan. Check out our page on the Bankruptcy Means Test to learn more.
The good news is that if your debt falls under certain conditions (you previously served in the military, or your debt is primarily business debt) you don’t need to pass the means test. Read more information on opting out of the means test on our page about not taking the means test.
Following this, you should learn more about “Consumer vs. Nonconsumer Debt” to determine whether or not you will need to take the means test.
You’ll also need to understand how to calculate “current monthly income” as determined by Congress. Check out our “What is Current Monthly Income for the Means Test?” page to calculate this information. The general rule us that the lower your income, the more likely you are to pass the test. This is beneficial for those who have suffered a recent drop in salary or loss of employment, as these conditions do not count against you when filing Chapter 7.
You’ll also need to understand your household size, expenses, and employment status will affect the means test. In many cases, you can make deductions or adjustments that can mean the difference between a fail and a pass. Our pages on expenses and the means test, household size and the means test, and how mortgages can help you pass the means test can help you fine-tune your monthly income and finances to better represent your financial status.
Don’t forget that you can also adjust deductions and expenses when it comes to the means test based on your marital status. Check out what “Adjustments of Means Test for Spouse Filing Bankruptcy Alone” and “Allowable Deductions for the Means Test” are available to you based on your marital and filing status.
Want A Fresh Start, LLC
343 W Roosevelt St #100
Phoenix, AZ 85003
Blog URL: https://wantafreshstart.com/chapter-7-bankruptcy-means-test/
At your free bankruptcy consultation with a bankruptcy attorney, you will meet directly and exclusively with an independent, licensed bankruptcy lawyer. Your issues will be discussed and your fees set by a bankruptcy lawyer who will be able to evaluate your specific bankruptcy situation. Should you file for bankruptcy? Do you need Chapter 7 bankruptcy or Chapter 13 bankruptcy? Your attorney can help you decide what decision is right for you.
Las Vegas NV Chapter 7 Bankruptcy Attorney
Las Vegas NV Chapter 13 Bankruptcy Attorney
Want A Fresh Start, LLC – Las Vegas
7251 West Lake Mead Blvd., Suite 300
Las Vegas, NV 89128
Phone: (702) 997-4149