Colorado Bankruptcy Exemption Basics – What You Can Keep
In today’s slow economy, more U.S. consumers than ever are faced with impossible amounts of debt – and Colorado is no exception. Many Colorado residents, faced with crippling debt, are contemplating bankruptcy. In some instances, bankruptcy is a logical choice for consumers looking for a way to start over. However, many consumers are reluctant to file bankruptcy because they fear losing important assets like their home, car, or retirement benefits. Fortunately, the State of Colorado allows residents to keep their most important possessions while relieving themselves of crippling debt.
Colorado is one of the more bankruptcy-friendly states in the country. Unlike many other U.S. states, Colorado has relatively relaxed exemption rules for Chapter 7 bankruptcy filers. An exemption rule allows a person filing bankruptcy to keep certain assets ?out? of the bankruptcy. This means that filing bankruptcy can get you out from underneath unsecured debts without losing your vehicle or your home.
Many people do not realize that bankruptcy is a fundamental American right that’s included in the U.S. Constitution. America’s founders included the right to file bankruptcy in the constitution because they believed that the common person is entitled protection from creditors. Many famous people in America’s history – from businessmen Henry Ford and Milton Hershey to politicians Abe Lincoln and Thomas Jefferson – have filed for bankruptcy protection.
First and foremost, the purpose of bankruptcy is to protect consumers from crippling, overwhelming debt. Since protection is the ultimate goal of bankruptcy, Colorado’s lawmakers have defined fairly generous exemptions for residents. Specifically designed to help consumers start over, Colorado allows consumers to exempt as much as $60,000 dollars worth of home equity. This allows people to file bankruptcy and start their lives over without losing their most valuable asset (their home).
Colorado provides exemptions for other important assets as well. Colorado residents are entitled to exempt their vehicle, their retirement assets, and many basic possessions that are necessities (like clothing and furniture). Again, bankruptcy is designed to protect consumers and help them start over. Important possessions that are needed for daily life – like a car and tools for work – can be kept out of bankruptcy.
Colorado’s bankruptcy exemption rules are designed to help consumers, but they’re not some sort of pass that allows people to avoid their obligations. When a consumer files bankruptcy, any cash, second homes, or valuables they have may be taken and distributed to creditors. These valuables can include clothing, jewelry, furniture, artwork, and even family heirlooms. If you’re serious about filing bankruptcy and you’d like to avoid losing your valuables, there are some strategies you can implement, but you must consult with a bankruptcy attorney to learn more about these strategies and how to implement them.
Bankruptcy isn’t something that should be taken lightly, and anyone considering bankruptcy would be smart to consult with an attorney. Filing bankruptcy can be a complicated legal process. There can be a lot of preparation involved, and if mistakes are made there can be serious legal and financial ramifications. Bankruptcy lawyers are invaluable because they can help consumers avoid costly mistakes.
Bankruptcy isn’t always a simple process, and it’s not a trick that allows consumers to avoid obligations. However, bankruptcy IS a legally guaranteed right and a great way for some consumers to get out from underneath inescapable debt. It might not be for everyone, but bankruptcy is a smart financial choice that is legally guaranteed. Colorado residents are fortunate to live in a progressive, consumer-oriented state with substantial bankruptcy exemption rules. So, if you’re considering bankruptcy and you live in Colorado, your next step should be to contact a bankruptcy attorney and discuss your options.
Author and Colorado native Jason Lancaster is a former finance manager. If you’re considering bankruptcy, be sure to consult with a Colorado bankruptcy attorney to learn more about exemption rules and your legal rights.
