What Is Chapter 7 Bankruptcy?
In today’s economy, anyone can have debt problems. A business failure, job loss, divorce or serious illness can put you in a deep financial hole. For many people with serious debt problems, Chapter 7 bankruptcy can provide a way out.
Debt Liquidation And A Clean Slate
Chapter 7 bankruptcy is a one-time liquidation of debt. When you file Chapter 7 bankruptcy, you place all of your debts and assets into one pot, which is called your bankruptcy estate. The court can take some of your assets to pay your debts. Other assets will be protected. When you are finished, most debts will be wiped out.
Most people who file bankruptcy in Colorado can keep most or all of their possessions, including:
- Up to $60,000 in home equity ($90,000 if you are over 60)
- Up to $5,000 equity in vehicles if you are filing single, and $10,000 if filing jointly (this value doubles if you are over the age of 60)
- Your retirement savings, including pension, IRA and 401(k) accounts
- Most or all of your household goods, including personal belongings such as jewelry
- Not all assets are protected when you file Chapter 7 bankruptcy. You may not be able to keep things like boats, recreational vehicles and vacation homes
Filing Chapter 7 bankruptcy includes an immediate stop to adverse creditor actions such as harassment, phone calls, wage garnishment, repossession and home foreclosure.
If you have assets you would lose in a Chapter 7 bankruptcy filing, you may be able to keep those assets if you file Chapter 13 bankruptcy.