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Colorado Bankruptcy Asset Protection Laws Change On July 1, 2015

On July 1, 2015 the Colorado asset protection statute will change thanks to the hard work of several of my fellow Colorado Bankruptcy Attorneys. This law will affect every Bankruptcy filed in Colorado on or after July 1, 2015. This is part 1 of a series on the changes to the law.


If you are considering filing a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in the State of Colorado you may want to wait until July 1, 2015. On July 1, 2015 the exemption or protection for assets of Colorado residents will significantly increase in several asset protection categories. This means that when a Chapter 7 Bankruptcy Trustee, who is the person representing your creditors in a Bankruptcy, looks over your Bankruptcy Petition to see if there are assets that can be collected from you and sold to pay creditors, that it will be less likely you will lose any assets.

In a Chapter 13 Bankruptcy, it means that you may end up paying less back to your creditors than you would have before July 1, 2015 because a Chapter 13 Plan contains a reconciliation section that essentially requires you to show that your creditors do at least as well in a Chapter 13 as in a Chapter 7.


Many parts of the law are changing but, for most people filing bankruptcy, the two most important changes are an increase in the Colorado homestead exemption and automobile exemption.


The homestead exemption protects the equity in your home which is the difference between what your house is worth, how much you owe against its current market value. The homestead exemption will increase from $60,000 to $75,000 for people under 60 years of age. For people 60 years of age or older, the homestead exemption will increase for $90,000 to $115,000. The exemption is not per debtor, it is per the home. So you get one homestead exemption and not one for each debtor. Generally speaking you or your family need to be living in the home to claim the exemption. So, you could not claim an exemption on a rental home that you do not live in.


Prior to July 1, 2015 you can use the exemption to protect as many motor vehicles or bicycles as you wanted. So if you had 10 cars each worth $500 you could protect them because the exemption limit per debtor was $5000. After July 1, 2015 you will only be able to protect two vehicles and presumably two bicycles per debtor but, the protection will increase from $5000 to $7,500 for people 59 or younger. The exemption will increase from $10,000 to $12,500 for people 60 years of age or older or someone who has been determined to be disabled such as by receiving social security disability or private disability. The law was clarified so that there is no automobile exemption for snowmobiles, all-terrain vehicles, golf carts, boats or other watercraft, travel trailers, tent trailers or motor homes.

If you are considering filing a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy in Colorado you should contact a Bankruptcy Attorney to see how the new law will effect a bankruptcy filing. Depending on your circumstances, you may want to file before or after to July 1, 2015. By law, only an attorney can provide legal advice.