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Denver Lawyer Clark Daniel Dray

Colorado Bankruptcy Basics

Bankruptcy Lawyers in Denver, CO

Have you been struggling with debt? Filing for bankruptcy can seem like the only way out. It’s not easy, but there are ways of making it easier on yourself – especially if your bankruptcy attorney is in Denver!

Burdened by dental work or student loans or debt that just won’t stop growing despite all efforts at repayment–you’re probably thinking “I could go bankrupt too.” Well, hold onto those thoughts because we have an excellent team here who would love nothing more than helping someone get back up again.

Let’s talk about how you can get out of debt with the help of a Denver Bankruptcy Lawyer at Dray Legal.

  • New Colorado Bankruptcy Laws
  • Colorado Bankruptcy Process
  • Why do you need a bankruptcy attorney?

New Colorado Bankruptcy Laws

Because of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCP), many of my clients in Denver and other parts of Colorado believe they do not qualify for bankruptcy. Even with the new rules, Chapter 7 eligibility remains. The new bankruptcy rules only affect 3% of filers, the government claims.

They choose Chapter 7 because it discharges almost all unsecured debts without recourse.

The BPC defines gross income broadly. However, it excludes SSI and SSD (SSD). Without regard to whether or not the spouse files, the debtor’s spouse’s gross income is included.

Qualifying for Chapter 7

Chapter 7 is automatic if the debtor’s gross income is less than the median income for their family size. Military or Homeland Defense personnel with unsecured business debt and a 30% disability rating automatically qualify for Chapter 7.

Qualifying for Chapter 13

Debtors who earn more than the DOJ’s inflation-adjusted threshold must pass the Means Test. The Means Test subtracts withholding taxes. The Means Test also limits deductions to IRS regional and local allowances. After deducting all authorized costs, a debtor must file chapter 13 and pay a trustee monthly (usually for 60 months).

Disability, recent unemployment, or even death may qualify a debtor for Chapter 7. Student debt payments are rare. No unusual circumstances exist, the debtor’s income is reasonable, and Chapter 13 is not preferred.

A debtor may be denied a discharge if they act in bad faith, such as making excessive luxury purchases.

To determine eligibility under Chapter 7 or 13, contact Dray Legal for legal help and individual evaluation.

Denver Bankruptcy Exemptions

To prevent overreaching creditors from seizing all of a debtor’s property, the Bankruptcy Code references Colorado state law (i.e. what a debtor can keep). Creditors or the trustee may sell a large portion of the debtor’s property to pay debts. Many would-be filers never consult a Denver bankruptcy attorney on how they can protect their assets and get a fresh start. Dray Legal can help you maximize your Chapter 7 or 13 exemptions.

With Chapter 7 and Chapter 13 bankruptcy, Colorado provides extensive property homestead exemption and others. Find out from our experienced bankruptcy attorneys what your exemptions may be.

The initial payment has no bearing on the property’s value. The property value on the day of bankruptcy is vital. Vehicles and furniture depreciate quickly.

Calculate the equity and any closing costs.

Assume you own a $300,000 home that you want to keep, but was purchased for $350,000. The loan is $200,000. It’s a $100,000 profit! If you’re under 60 and not disabled, your non-exempt equity is less than $40,000.

You may be wondering what happens if you have too much equity.

A chapter 13 payment plan may be preferable to a chapter 7 trustee selling the house to repay unsecured creditors. If the debtor qualifies, Chapter 7 protects the home up to $260,000 in value. If you have too much equity, you can sell or refinance.

If you have no equity, you can sell the house and pay off your debts. Surrendering a large equity home is clearly not the best option.

The Colorado Bankruptcy Exemptions also protect property from seizure and sale. The income from an otherwise exempt property can still be used to determine eligibility or the Means Test. For example, sheltered retirement income.

Knowing what a Chapter 7 trustee may liquidate allows you to protect your most prized possessions. A bankruptcy lawyer at the Dray Legal law firm will fight tirelessly to keep your property.

Bankruptcy Trustees

The U.S. Trustee appoints trustees. A trustee is not a judge but locates and liquidates non-exempt assets for unsecured creditors. For example, a boat or timeshare are “non-essential” personal property items.

By surrendering non-exempt property, most debtors repay part or all of their debts under Chapter 7 or 13. Our bankruptcy attorneys can help you protect your assets.

Colorado trustees are more proactive due to limited asset protection. Debt relief through Chapter 7 is quick and easy. A debtor must either immediately return an exempt item or pay its value monthly. Ordinarily, a “no-asset” trustee receives $60 plus a fee.

The unsecured creditors’ trustee in Chapter 13 has additional duties. The remaining monthly plan payments go to unsecured creditors who filed timely Proofs of Claim. Late payments lead to dismissal. (A month behind is acceptable.) A trustee and a debtor’s lawyer will always be at odds over unsecured debt.

The chapter 13 trustee has a reason to complain: 10% of all payments. Subjective bankruptcy usually irks the trustee. Means-Test deductions raise plan payments (and request documentation or receipts). A 3-year plan (for low-income debtors) may result in more money paid to unsecured creditors and the trustee.

A bankruptcy trustee guarantees non-exempt asset value. In Colorado, the principal house homestead exemption is $60,000 ($90,000 for seniors or disabled). After mortgage liens and selling costs, a $20,000 non-exempt component must be “reconciled” over 3–5 years (interest-free). So the debtor’s assets are protected.

Clark Daniel Dray, an experienced Denver bankruptcy lawyer, can help you protect your rights.

Colorado Bankruptcy Process

With our vast legal experience, we have helped clients and companies to reduce or eliminate credit card debt, medical bills, tax debt, and debt arising from foreclosure or repossession.

According to the client’s goals and the Means Test, Chapter 7 bankruptcy is not at all like Chapter 13 and requires no monthly plan payments. The quickest and easiest way out of debt is filing Chapter 7. To keep valuable assets and to restructure most debts into three to five-year monthly payments, one must file Chapter 13.

We offer a free initial consultation in our Denver, Colorado office to those considering bankruptcy. We’ll look over your finances to prepare your bankruptcy case as well as notify you of exclusions.

This data will be used to determine eligibility for Chapter 7 under the Means Test, Chapter 13 plan length, and monthly disposable income. Your case is filed and an Automatic Stay is issued.

Bankruptcy petitions are filed using financial data, a retainer, and a court filing fee. A 341 hearing will be held 3-4 weeks after filing. If you file Chapter 13, we’ll discuss monthly payments and plan length.

Chapter 7 or 13 trustees usually hold a 10-15 minute meeting of creditors in the Colorado Bankruptcy Court. Within 45 days of the creditor meeting, you must complete a financial management course.

Objections to discharge in Chapter 7 must be made within 60 days. Absent an objection, the debtor is freed.

The Chapter 13 plan may be opposed three court days before the 341 hearing. An objection can be made by a secured creditor or the Chapter 13 trustee. Pre-meeting concerns will be addressed.

Another chapter 13 trustee hearing in Denver is set to determine if a confirmable plan exists. The court may modify or approve the plan on the spot. Upon approval, the debtor will pay monthly until discharged. The court approves most of our chapter 13 requests.

Bankruptcy Automatic Stay

A petition filed in Colorado prevents most secured and unsecured creditors from collecting on a debtor’s property. A hearing in Colorado Bankruptcy Court is not required to obtain the Automatic Stay. The Automatic Stay protects almost all of our clients from creditors suing, garnishing, or levying their wages, bank accounts, etc.

A special motion may be filed within a year of the case to obtain the regular collection restrictions.

For example, Dray Legal will vigorously enforce the Automatic Stay to prevent creditors from:

  • Suing after or before filing for bankruptcy.
  • Collecting by mail, phone, or in-person
  • Requiring collateral to secure a debt, putting a lien secured property.

It needs to be said that an automatic stay has limitations:

  • It doesn’t stop criminal charges, IRS or CDOR tax audits, or landlord evictions with possession judgments.
  • A secured creditor does not need to request a stay.
  • The debtor still needs to pay the secured loan monthly.
  • The debtor is obliged to pay the fair market value of the collateral or relinquish it and pay any debts.

Secured and unsecured creditors in Chapter 13

Unconfirmable plans can expect a 36- to a 60-month confirmable monthly payment schedule. Relief from stay request in a Chapter 13 case is avoided by paying the lender and the plan together.

Dray Legal Attorneys can help you determine which collection methods are illegal and enforce the automatic stay, to stop creditor harassment. Creditors who violate the automatic stay will face consequences. Trust that our reliable attorneys will make sure an extension of the automatic stay is processed for recent filers.

Why do you need a bankruptcy attorney?

Dray Legal is a Denver bankruptcy and estate planning legal firm. Being a graduate of Ohio State University Moritz College of Law, Clark Daniel Dray is a seasoned Denver bankruptcy attorney. Clients seeking asset protection frequently have complex financial situations and need tax relief. Clients at Dray Legal with tax and non–tax debt who are looking for a fresh start are increasing as Colorado’s debt levels rise.

However, due to the complexity of bankruptcy procedures, a tax expert can help with the following to maximize debt relief:

  • Resolved revenue issues

Our attorneys will assess your tax liability based on the type and amount owed, when the returns were filed, and the IRS or state’s most recent assessment. It is possible to use a chapter 13 payment plan to pay back the non–dischargeable tax interest and penalty (from the date of the bankruptcy filing forward). Parallel to Chapter 7 or 13, we may file an Offer in Compromise (requesting a partial reduction of non–dischargeable tax).

  • Help with Tax Refund

Income tax withholdings and exemptions are compared to the bankruptcy filing date to help you save money. Trustees can normally seize a non–filing spouse’s share of a tax return.

  • Aid in Tax Shield for Sole Proprietors or Small Business Owners

Unlike W-2 employees, small business owners have payroll and withholding issues. Our team at Dray Legal can help you calculate the exact tax due to the IRS, Colorado, and any city. If you have questions about your claim, contact us now. Creating a company to pay as little tax as possible also allows a debtor to spend money as he sees fit (smart pre-bankruptcy planning).

  • Protect assets from creditors and the trustee.

Colorado Exemption rules will be used to ensure creditors liquidate as little property as possible. Clients who own assets with built-in capital gains must consider how to protect their value in more complex situations. Dray Legal also advises clients on property transfers, whether ordered by a divorce court or not.

  • Advice on Tax Issues In Surrender of Property

Many customers unwittingly return their homes to their lenders. In fact, many customers are confused when their lenders send them a 1099A or 1099COD. Dray Legal can advise you on the tax implications of giving up your home.

Debt Relief with a Bankruptcy Attorney

Nobody wants to be forced to sell their home or car due to financial hardship. Dray Legal Bankruptcy Lawyers can help you fight debt collection actions and settle debts inside or outside of bankruptcy. Your creditors may sue you if you have a credit card, medical, or personal debt. In some cases, a creditor may “charge off” a debt for accounting reasons. Creditors have six years to sue and get a judgment in Colorado. Creditors can no longer bother you after you have settled your debts or filed for bankruptcy.

A debt settlement and bankruptcy lawyer can negotiate better. Contact Dray Legal now and speak to our experienced bankruptcy lawyers to guide you in your bankruptcy petition and fight tirelessly beside you until you break free from your financial rut.


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