What is Bankruptcy?

Bankruptcy is a legal process designed to help individuals and businesses manage or eliminate overwhelming debt under the protection of federal bankruptcy courts. It provides a structured way to address financial difficulties, either by discharging (eliminating) certain debts or creating a repayment plan to pay creditors over time. Bankruptcy laws exist to give people a fresh start when debt becomes unmanageable, while ensuring creditors are treated fairly.

The process is governed by the U.S. Bankruptcy Code, and it typically involves filing a petition with a bankruptcy court, which triggers an automatic stay. This stay halts most collection actions, such as lawsuits, wage garnishments, and creditor calls, giving you breathing room to address your financial situation.

Types of Bankruptcy: Chapter 7 and Chapter 13

Bankruptcy comes in different forms, known as “chapters,” with the most common for individuals being Chapter 7 and Chapter 13. Understanding the differences can help you decide which option is best for you.

Chapter 7 Bankruptcy: Liquidation

Chapter 7, often called “liquidation bankruptcy,” is designed for individuals with limited income who cannot repay their debts. In this process, a bankruptcy trustee may sell (liquidate) non-exempt assets to pay creditors. However, many filers keep most or all of their property due to state and federal exemptions. Once completed, most unsecured debts—like credit card balances, medical bills, and personal loans—are discharged, giving you a clean slate.

Who qualifies? To file for Chapter 7, you must pass a means test, which evaluates your income and expenses to determine eligibility. If your income is below the median for your state, you’re likely eligible.

Chapter 13, known as the “wage earner’s plan,” allows individuals with regular income to create a 3- to 5-year repayment plan to pay back some or all of their debts. This option is ideal for those who want to keep assets like a home or car and have a steady income to make monthly payments. At the end of the plan, remaining eligible debts may be discharged.

Chapter 13 Bankruptcy: Repayment Plan

Who qualifies? Chapter 13 is typically for individuals with income too high for Chapter 7 or those looking to protect assets from liquidation.

How Does Bankruptcy Work?

The bankruptcy process varies depending on the chapter you file, but here’s a general overview:

1. Consultation with a Bankruptcy Attorney: A qualified attorney will review your financial situation, discuss your goals, and recommend the best chapter for your needs.
2. Filing the Petition: You’ll file a bankruptcy petition with the court, including detailed financial information like income, expenses, assets, and debts.
3. Automatic Stay: Once filed, an automatic stay stops most creditor actions, giving you temporary relief.
4. Trustee and Creditor Meeting: A bankruptcy trustee oversees your case and holds a meeting of creditors, where you answer questions about your finances.
5. Debt Resolution: In Chapter 7, eligible debts are discharged after asset liquidation (if any). In Chapter 13, you follow a court-approved repayment plan.
6. Financial Fresh Start: Upon completion, you’re free from discharged debts and can begin rebuilding your financial life.

Is Bankruptcy Right for You?

Bankruptcy isn’t a one-size-fits-all solution. It can provide significant relief for those drowning in debt, but it also has long-term consequences, such as a temporary impact on your credit score and likely a few years before qualifying for a home loan. However, think how much more able you will be to pay a future loan if you have discharged your debt.  Before filing, consider:

• Your Debt Load: Are you unable to keep up with payments despite cutting expenses?
  • Types of Debt: Bankruptcy can discharge unsecured debts like credit cards and medical bills but may not eliminate student loans, child support, or certain taxes.
  • Your Goals: Do you want to keep your home or car? Are you looking for a complete debt discharge or a manageable repayment plan?

Consulting with an experienced bankruptcy attorney can help you weigh the pros and cons and explore alternatives like debt settlement or credit counseling.

Why Choose LONG & LONG?

Attorney Martin Long is a former Trustee for the U. S. Bankruptcy Court. At LONG & LONG, we understand how stressful financial challenges can be. Our compassionate bankruptcy attorneys have helped countless clients in Denver and Colorado achieve debt relief and regain control of their finances. We provide personalized guidance, from evaluating your eligibility to guiding you through the entire bankruptcy process.

Ready to explore your options? Contact us today for a free consultation. Call us at 303-832-2655 or fill out our online contact form to schedule an appointment. Let us help you take the first step toward a brighter financial future.

Frequently Asked Questions About Bankruptcy

Will bankruptcy ruin my credit?

Bankruptcy will impact your credit score, but the effect is temporary. With responsible financial habits, you can rebuild your credit over time.

Can I keep my house and car?

In many cases, yes, especially with Chapter 13 or if your assets are protected by exemptions in Chapter 7. An attorney can help you understand your options.

How long does bankruptcy take?

Chapter 7 typically takes 4–6 months, while Chapter 13 lasts 3–5 years, depending on your repayment plan.

Take control of your financial future today. Don’t let debt hold you back. Contact LONG & LONG to discuss how bankruptcy can help you achieve a fresh start.

Can You File Bankruptcy By Yourself?

What Does Bankruptcy Do?

Bankruptcy is a legal process governed by federal law that helps individuals and businesses manage or eliminate debts they cannot pay. It provides a fresh start by either discharging (eliminating) certain debts or restructuring them into a manageable repayment plan. When you file for bankruptcy, an automatic stay immediately stops most creditor actions, such as collection calls, lawsuits, wage garnishments, and foreclosures, giving you time to address your financial situation.

Types of Bankruptcy for Individuals

Before diving into the process, it’s important to know the two main types of bankruptcy for individuals: Chapter 7 and Chapter 13. Each works differently and suits different financial situations.

• Chapter 7 (Liquidation): This eliminates most unsecured debts (e.g., credit cards, medical bills) by liquidating non-exempt assets to pay creditors. It’s ideal for those with low income and few assets.
• Chapter 13 (Repayment Plan): This allows you to keep your property while repaying debts over 3–5 years. It’s suited for those with regular income who want to protect assets like a home or car.

How Does Bankruptcy Work? A Step-by-Step Guide

The bankruptcy process varies slightly depending on whether you file Chapter 7 or Chapter 13, but here’s a general overview of the key steps:

Step 1: Evaluate Your Financial Situation

Start by assessing your debts, income, expenses, and assets. Consulting a bankruptcy attorney is crucial at this stage. They’ll help determine if bankruptcy is the best option or if alternatives like debt settlement or credit counseling might work better. A qualified attorney can also recommend whether Chapter 7 or Chapter 13 is right for you.  

Step 2: Complete Credit Counseling

Before filing, you must complete a credit counseling course from an approved agency. This course, which takes about 1–2 hours, reviews your financial situation and explores debt relief options. You’ll receive a certificate of completion, which must be filed with your bankruptcy petition.

Step 3: File the Bankruptcy Petition

Filing begins with submitting a bankruptcy petition to the federal bankruptcy court in your district. This includes detailed forms listing your income, expenses, assets, debts, and financial transactions. Once filed, the automatic stay takes effect, halting creditor actions. Your attorney will ensure all paperwork is accurate to avoid delays or complications.  https://www.uscourts.gov/court-programs/bankruptcy

Step 4: Meet with the Bankruptcy Trustee

After filing, a bankruptcy trustee is appointed to oversee your case. You’ll attend a 341 meeting of creditors (named after Section 341 of the Bankruptcy Code), typically 20–40 days after filing. At this meeting, the trustee and creditors (if they attend) ask questions about your finances under oath. Your attorney will prepare you for this straightforward process, which usually lasts 10–15 minutes. https://www.cacb.uscourts.gov/video/bankruptcy-basics-part-5-creditors-meeting

Step 5: Follow the Bankruptcy Process

The next steps depend on your bankruptcy type:

Chapter 7: The trustee reviews your assets to determine if any non-exempt property can be sold to pay creditors. In most cases, filers keep all their property due to exemptions. After 60–90 days, eligible debts are discharged, meaning you’re no longer obligated to pay them. The entire process typically takes 4–6 months. https://www.irs.gov/businesses/small-businesses-self-employed/bankruptcy-frequently-asked-questions

Chapter 13: You propose a repayment plan, which the court must approve. You’ll make monthly payments to the trustee, who distributes funds to creditors. The plan lasts 3–5 years and remaining eligible debts may be discharged upon completion.  https://www.weltman.com/publication-your-top-chapter-7-and-13-bankruptcy-questions-answered

Step 6: Complete a Financial Management Course

Before receiving a discharge, you must complete a debtor education course (different from the initial credit counseling). This course teaches budgeting and financial management skills to help you avoid future debt problems. You’ll file a certificate of completion with the court.

Step 7: Receive Your Discharge

Once all requirements are met, the court issues a discharge order. In Chapter 7, this wipes out eligible debts. In Chapter 13, it eliminates remaining eligible debts after completing the repayment plan. Note that some debts, like student loans, child support, and certain taxes, are typically not dischargeable. https://www.justice.gov/ust/bankruptcy-information-sheet-0

What Happens After Bankruptcy?

After bankruptcy, you can start rebuilding your financial life. While bankruptcy stays on your credit report for 7–10 years (7 for Chapter 13, 10 for Chapter 7), its impact lessens over time. To rebuild credit, focus on paying bills on time, maintaining a low debt-to-income ratio, and using secured credit cards responsibly. https://www.boginmunns.com/faqs/bankruptcy-frequently-asked-questions/

Bankruptcy also offers a fresh start, free from the stress of unmanageable debt. You may be able to qualify for certain loans, like FHA mortgages, as soon as 1–2 years after filing, depending on your situation.

Why Work with LONG & LONG?

Attorney Martin E. Long is a former Bankruptcy Trustee for the U.S. Bankruptcy Court, District of Colorado. Navigating bankruptcy can be overwhelming, but you don’t have to do it alone. At LONG & LONG, our compassionate bankruptcy attorneys in Denver, Colorado have helped countless clients throughout Colorado achieve debt relief through Chapter 7 and Chapter 13. We provide personalized guidance, from filing your petition to securing your discharge, ensuring a smooth process.

Ready to take control of your finances? Contact us today for a free consultation. Call 303-832-2655 or fill out our online contact form to schedule an appointment. Let us help you start your journey to a debt-free future.

Frequently Asked Questions About Bankruptcy

Will I lose everything if I file for bankruptcy?

No. Exemptions protect certain assets, like your home, car, and personal belongings, in most cases. An experienced bankruptcy attorney will maximize what you keep.

 Common Bankruptcy Questions

How long does bankruptcy take?

Chapter 7 typically takes 4–6 months, while Chapter 13 lasts 3–5 years due to the repayment plan.  https://hallnavarro.com/11-common-bankruptcy-questions-answered/

Can bankruptcy stop foreclosure?

Yes, the automatic stay can temporarily halt foreclosure, and Chapter 13 can help you catch up on missed payments.

Don’t let debt control your life. Contact LONG & LONG at 303-832-2655 or through this website. You will receive a quick response today to learn how bankruptcy works and explore your path to financial freedom./bankruptcy-blog/chapter-7-vs-chapter-13-bankruptcy/

What Is an Asset Transfer in Bankruptcy?

An asset transfer occurs when you give away, sell, or move property (e.g., cash, real estate, vehicles, or personal belongings) out of your name before filing for bankruptcy. Common examples include:

• Transferring a car title to a relative.
• Moving money from your bank account to someone else’s.
• Selling property to a friend for less than its market value.
• Paying off a loan to a family member while ignoring other creditors.

While you might think these actions safeguard your assets, bankruptcy courts view them as potential attempts to hide wealth from creditors, which can trigger severe penalties.

Why Transferring Assets Is Dangerous

Bankruptcy laws are designed to ensure fairness for both debtors and creditors. When you file for Chapter 7 or Chapter 13 bankruptcy, the court examines your financial transactions—often going back several years—to determine if you’ve acted in good faith. Transferring assets before filing can lead to the following risks:

A fraudulent transfer occurs when you move assets to avoid paying creditors or to keep them out of the bankruptcy estate. There are two types:

1. Accusations of Fraudulent Transfers

• Actual Fraud: Intentionally hiding assets to deceive creditors or the court.
• Constructive Fraud: Transferring assets for less than fair value, even without malicious intent, when you’re insolvent.

Consequences:

• The bankruptcy trustee can reverse the transfer, recovering the asset for creditors.
• Your bankruptcy discharge (debt relief) may be denied, leaving you liable for debts.
• In rare cases, fraudulent transfers can lead to criminal charges for bankruptcy fraud.

Example: You transfer your $20,000 car to your sibling for $1,000 a month before filing. The trustee can undo the transfer, seize the car, and possibly deny your discharge.

2. Loss of Exemptions

Bankruptcy laws allow you to protect certain assets through exemptions (e.g., a portion of home equity, a car, or personal belongings). However, if you transfer an asset, you lose the ability to claim it as exempt, and the trustee may still pursue it.

Example: You give your paid-off car to a friend to avoid losing it in Chapter 7. The trustee reverses the transfer, sells the car, and you lose both the asset and any exemption you could have claimed.

3. Denial of Bankruptcy Discharge

The court expects honesty in your bankruptcy filing. Transferring assets to hide them can be seen as bad faith, leading to:

• Denial of your discharge, meaning you remain responsible for all debts.
• Dismissal of your case, wasting time and legal fees.

Example: Paying off a $10,000 loan to your parents right before filing can be viewed as favoring one creditor over others, risking your entire case.

4. Preference Payments Issues

A preferential transfer occurs when you pay one creditor (especially a friend or family member) over others before filing. The trustee can claw back these payments to redistribute them fairly among creditors.

Example: You repay a $5,000 personal loan to your cousin six months before filing. The trustee demands your cousin return the money to the bankruptcy estate, creating family tension and legal costs.

5. Criminal Penalties for Bankruptcy Fraud

In extreme cases, intentionally hiding assets through transfers can lead to bankruptcy fraud, a federal crime. Penalties include:

• Fines up to $250,000.
• Up to 7 years in prison.

Example: Transferring $50,000 to an offshore account to hide it from the court could trigger a fraud investigation if discovered.

How Far Back Does the Court Look?

Bankruptcy trustees have the authority to review your financial transactions for a specific period before your filing, known as the look-back period:

• 90 Days: For preferential transfers to regular creditors (e.g., credit card companies).
• 1 Year: For preferential transfers to “insiders” (e.g., family, friends, or business partners).
• 2 Years: For fraudulent transfers under federal bankruptcy law.
• Up to 4 Years or More: Some states, like Colorado,  have longer look-back periods under their fraudulent transfer laws (e.g., Colorado’s  Uniform Fraudulent Transfers Act).

Even small transfers can be scrutinized, so transparency is critical.

Common Asset Transfer Mistakes to Avoid

Here are some actions debtors often take, mistakenly thinking they’re safe:

1. Gifting Assets to Relatives: Giving your house or car to a child or sibling to “keep it in the family.”
2. Selling Below Market Value: Selling property to a friend for a fraction of its worth.
3. Moving Money Around: Transferring cash to a new account or someone else’s name.
4. Paying Off Favored Debts: Settling debts with family or friends while ignoring other creditors.
5. Hiding Assets in Trusts: Placing assets in a trust without proper legal guidance, thinking they’re protected.

Why These Fail: Trustees are trained to spot suspicious transactions, using bank records, property deeds, and other documents to uncover transfers.

How to Protect Assets Legally

Instead of transferring assets, work with a bankruptcy attorney to protect your property within the law. Here’s how:

1. Use Exemptions: Most states offer exemptions to shield assets like your home, car, or retirement accounts. For example, federal exemptions (as of 2025) allow you to protect up to $27,900 in home equity per person.
2. Plan Your Filing Timing: Strategically timing your bankruptcy can minimize the impact on recent assets, like tax refunds or bonuses.
3. Disclose Everything: Full transparency with your attorney and the court prevents accusations of hiding assets.
4. Avoid Last-Minute Moves: Don’t make large financial changes (e.g., selling property) in the year before filing without legal advice.
5. Consider Chapter 13: If you have valuable non-exempt assets, Chapter 13 allows you to keep them while repaying creditors over 3-5 years.

What to Do If You’ve Already Transferred Assets

If you’ve made a transfer and now worry it could affect your bankruptcy, don’t panic—but act quickly:

1. Consult a Bankruptcy Attorney Immediately: An experienced lawyer can assess the transfer and suggest ways to mitigate damage.
2. Be Honest: Disclose all transfers to your attorney and the court. Hiding them increases the risk of penalties.
3. Document the Purpose: If the transfer was for a legitimate reason (e.g., paying a reasonable debt), provide evidence to support your case.
4. Prepare for Clawbacks: If the trustee reverses a transfer, the recipient may need to return the asset or its value.

Conclusion: Honesty Is the Best Approach

Transferring assets before filing bankruptcy might seem like a way to protect your wealth, but it’s a risky move that can backfire. From fraudulent transfer accusations to denial of discharge or even criminal charges, the consequences outweigh any short-term benefits. Instead, work with a trusted bankruptcy attorney to safeguard your assets legally through exemptions, proper planning, and full transparency.

Facing bankruptcy and worried about your assets? Contact our experienced bankruptcy attorneys now at LONG & LONG, (303) 832-2655, for a free consultation. We’ll help you navigate the process, protect what matters, and secure your financial fresh start.

/bankruptcy-blog/fraudulent-conveyance-what-is-it-and-what-does-it-mean/

/bankruptcy-blog/four-things-you-should-not-do-before-filing-for-bankruptcy/

What Are Bankruptcy Chapters?

When financial difficulties arise, individuals can file for bankruptcy under Chapter 7, Chapter 11, Chapter 12, or Chapter 13 of the U.S. Bankruptcy Code. Filing a petition in bankruptcy court places your case under the supervision of a bankruptcy judge. However, a bankruptcy trustee typically manages the process, handling either the liquidation of non-exempt assets (Chapter 7) or overseeing a repayment plan (Chapter 13). This guide focuses on the bankruptcy process for Chapters 7 and 13, explaining what happens to your property during and after bankruptcy.

 A debtor will usually have little interaction with the judge or even the creditors as the trustee handles most aspects of the petition and case. There are other chapters of the bankruptcy code such as Chapter 11 (reorganization) or Chapter 12 (farmers and fishermen), but the focus of this blog will be on Chapters 7 and 13.

Property Under Chapter 7

A Chapter 7 bankruptcy is entitled “Liquidation.” It involves a discharge of the debtor’s debts in a short time-frame and a liquidation of the non-exempt debtor’s assets. A Chapter 7 case is a complex measure, and should be considered carefully with the guidance of highly experienced legal counsel.  The Chapter 7 trustee will oversee a sale of non-exempt assets and distribution of all monies to the creditors and the bankruptcy judge will enter a discharge order of the creditor’s claims. Therefore, it is important to have experienced legal counsel who can assist in pre-bankruptcy planning and converting non-exempt assets into exempt assets.

Colorado observes an “opt-out” provision meaning that debtor’s must use the Colorado exemptions in a Chapter 7 case in lieu of federal bankruptcy exemptions. Some common Colorado exemptions under Chapter 7 are:

• Homestead (you may keep a portion of the equity in your home, ($250,000 or up to $350,000)or a certain amount of the proceeds of the sale)
• Reasonable amounts for alimony, support, and maintenance
• Pension and retirement benefits
• Insurance benefits to some degree
• Motor vehicle (your motor vehicle may be exempt if the equity is less than or equal to the exemption amount)

There are many other exemptions under Colorado law. Filing the petition, properly listing exempt property, and following the strict procedural guidelines is a complex process which is best approached with an experienced bankruptcy attorney. Legal counsel should be retained if contemplating a bankruptcy to protect your rights as a debtor in the proceedings.

Property Under Chapter 13

A Chapter 13 bankruptcy is also known as a wage earner’s plan and is available for individuals within a set income bracket. Under Chapter 13, an individual may be able to save their homes from foreclosure by “catching-up” on payments. Upon filing a Chapter 13 petition, a legal procedure known as an automatic stay takes effect. This stay prevents creditors from continuing collection actions against the debtor, including an upcoming foreclosure. However, debtors should be aware that if a bank completes the foreclosure proceedings before filing a petition then the stay will not stop the foreclosure. A debtor must file the petition before the foreclosure sale. A debtor may be able to keep some or most of their property in a Chapter 13 bankruptcy. The trustee will consolidate the creditor’s claims and disburse payments from the debtor to them under a repayment plan over the course of three to five years.

Contact your Denver Bankruptcy Attorney

As a former trustee for the U.S. Bankruptcy Court, with over thirty years’ experience, Bankruptcy Attorney Martin Long is an expert in the industry with decades of experience in Bankruptcy Law in Centennial, Colorado. We also serve Aurora, Loveland, Highlands Ranch, Denver, Littleton, Castle Rock, Colorado Springs, Colorado and the Denver metro area. For help with your financial matter, contact the Law Office of Long & Long. For a free initial consultation (via phone, Zoom, or office) call 303-832-2655 now.