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?

Here are the 5 most common warning signs that it may be time to consider filing for bankruptcy in Denver and Colorado:

1. You’re Using Credit Cards to Pay for Basic Living Expenses

One of the clearest red flags is relying on credit cards for groceries, gas, utilities, or rent. When your income no longer covers necessities and you’re charging everyday expenses just to survive, you’re likely in a debt spiral. High interest rates make the problem worse, turning small shortfalls into massive credit balances.

Denver and Colorado reality check: With Colorado’s high cost of housing and inflation still affecting many families, this sign appears frequently among working persons professionals and families across the metro area.

2. You’re Only Making Minimum Payments — or Missing Payments Entirely

If you can barely afford the minimum payments on credit cards, medical bills, or personal loans — or you’ve started missing payments — your debt is probably growing faster than you can pay it down. Late fees and penalty interest compound the issue, making it nearly impossible to catch up on your own.

This is especially stressful when combined with Denver’s competitive job market or unexpected expenses like car repairs in our variable mountain weather.

3. Creditors Are Harassing You Constantly

Non-stop collection calls, letters, and emails create enormous anxiety. Once creditors start threatening legal action, the pressure becomes unbearable for many people.

Good news: Filing bankruptcy triggers the automatic stay, which immediately stops most creditor harassment, collection calls, lawsuits, wage garnishments, and even foreclosure proceedings in most cases.

4. You’re Facing Foreclosure, Repossession, or Wage Garnishment

• Behind on your mortgage and received a notice of default?
• Worried your car will be repossessed?
• Already dealing with a wage garnishment or bank levy?

These are urgent warning signs. In Colorado, Chapter 7 or Chapter 13 bankruptcy can often stop foreclosure and give you time to catch up or discharge unsecured debts. Colorado’s generous homestead exemption (up to $250,000 in home equity — or $350,000 if you, your spouse, or a dependent is 60+ or disabled) helps many Denver homeowners protect their homes.

5. You Have No Emergency Savings and Live Paycheck to Paycheck

If an unexpected expense (medical bill, car breakdown, or job change) would push you over the edge, and you have no savings left, your financial cushion has disappeared. Many people in this situation also max out credit cards and consider payday loans or retirement withdrawals — both of which can make things worse.

Other common triggers in Denver include overwhelming medical debt, divorce, business failure, or job loss in industries affected by economic shifts.

What Should You Do If You Recognize These Signs?

Don’t wait until the situation becomes a crisis. Speaking with an experienced Denver bankruptcy attorney early can help you understand your options, protect your assets, and stop stressful collection actions.

In Colorado, you may qualify for Chapter 7 bankruptcy if your household income is below the current median (as of late 2025/early 2026: approximately $85,685 for one earner, $106,690 for two, and higher for larger families). Even if your income is higher, the full means test often allows qualification after allowable expenses.

Filing fees in 2026:

• Chapter 7: $338
• Chapter 13: $313

Attorney fees vary by case complexity, but many Denver filers find the cost is far less than the ongoing stress and interest of unmanageable debt.

Take the First Step Toward Financial Relief

If several of these warning signs sound familiar, it’s time to explore your options. A confidential consultation with a Denver bankruptcy lawyer can give you clarity on whether Chapter 7, Chapter 13, or another debt solution is right for your situation — without any obligation. Also see /bankruptcy-blog/can-bankruptcy-stop-repossession-bank-or-wage-garnishment-in-colorado/

Ready to stop the stress? Contact our Denver bankruptcy law office today for a free, no-obligation consultation. We proudly serve clients throughout Denver, Highlands Ranch, Aurora, Lakewood, Arvada, and the entire Front Range.

Call LONG & LONG P.C. now at 303-832-2655 or fill out the contact form below to schedule your appointment.

This is general information and not legal advice. Every situation is unique. Results depend on your specific financial circumstances and federal and Colorado bankruptcy laws.

If you’re drowning in debt and wondering if you’re the only one, the latest official numbers prove you’re not. On February 4, 2026, the Administrative Office of the U.S. Courts announced that total bankruptcy filings for the 12-month period ending December 31, 2025, reached 574,314 — an 11% increase from 517,308 the year before.

• Non-business (consumer) filings: 549,577 (up 11.2%)
• Business filings: 24,737 (up 7.1%)

Meanwhile, Americans ended 2025 carrying a record $1.28 trillion in credit card debt (Federal Reserve Bank of New York, Q4 2025).

These statistics are more than numbers — they represent real families in Denver, Colorado  and across the country facing high interest rates, medical bills, job changes, and the lingering effects of inflation. As a bankruptcy attorney who has helped clients in Colorado achieve a fresh start, I see this trend every day. The good news? Bankruptcy law exists precisely to give honest people relief when debt becomes unmanageable.

This guide explains what the rise means for you, why it’s happening, and how filing Chapter 7 or Chapter 13 bankruptcy in 2026 could be your smartest financial move.

Why Bankruptcy Filings Are Rising in 2025–2026

The increase isn’t random. Multiple economic forces are converging:

• Record consumer debt and high interest rates (credit cards often 20%+ APR)
• Medical expenses — still one of the top reasons people file
• Lingering inflation and cost-of-living pressures
• Normalization after pandemic-era relief suppressed filings
• Soft job market in certain sectors and slower wage growth

Experts at PwC, Epiq AACER, and the American Bankruptcy Institute expect filings to remain elevated or modestly rise further into 2026.

What the Rise Means for Everyday People Like You

Rising numbers don’t signal weakness — they signal that more Americans are choosing smart, legal protection instead of endless stress. You’re not alone, and bankruptcy is not failure. It’s a fresh start Congress designed for situations exactly like this.

Common warning signs it may be time to explore filing:

• Creditors calling or sending collection letters daily
• Wage garnishment or bank levies
• Falling behind on mortgage, rent, car payments, or utilities
• Using credit cards for groceries/gas while balances grow
• Overwhelming medical bills
• Debt stress affecting sleep, health, or relationships

If any of these describe your situation, a free confidential consultation can give you clarity and options.

Chapter 7 vs. Chapter 13 Bankruptcy in 2026 — Which Is Right for You?

Most individuals file under Chapter 7 or Chapter 13. wallstreetmojo.com

Chapter 7 vs Chapter 13 Bankruptcy | Which Bankruptcy to File?

2026 Means Test Update: Income limits (effective for cases filed after November 1, 2025) are state-specific and updated twice yearly. They range from roughly $65,000–$80,000 for a single person in lower-cost states to well over $100,000+ for a family of four in high-cost areas. If your 6-month average income is below your state’s median, you usually qualify for Chapter 7. We run the exact test for free during your consultation.

In Colorado, generous exemptions often let you keep your home, car, retirement accounts, and household goods.

Immediate Benefits of Filing in 2026

The second you file, the Automatic Stay protects you:

• Stops creditor calls and harassment
• Halts foreclosures, repossessions, wage garnishments, and most lawsuits
• Gives breathing room to plan your fresh start

Additional advantages:

• Discharge most credit card, medical, personal loan, and utility debt
• Potentially eliminate older income tax debts (3-2-240 rule)
• Stop IRS or state tax collections during tax season
• In Chapter 13, catch up on mortgage or car payments to keep your property

Many clients describe feeling an immediate sense of relief.

Common Myths About Bankruptcy — Busted in 2026

Myth: You’ll lose everything. Fact: Over 90% of Chapter 7 filers keep their home, car, and essentials thanks to exemptions.

Myth: Bankruptcy destroys your credit forever. Fact: The notation stays 7–10 years, but scores often rebound within 12–24 months with responsible habits (secured cards, on-time payments).

Myth: Only irresponsible people file. Fact: Medical issues, job loss, divorce, and economic shifts affect hardworking families every day.

Myth: You can’t get credit afterward. Fact: Many clients qualify for mortgages, auto loans, or credit cards within 1–2 years.

What to Expect: The Simple Step-by-Step Process

1. Free, confidential consultation (we review your numbers same day)
2. Short online credit counseling course
3. Gather documents (we provide a simple checklist)
4. File the petition (we handle all paperwork)
5. 341 Meeting of Creditors (quick, usually 5–10 minutes)
6. Complete debtor education course
7. Receive discharge order — most debts gone, fresh start begins

In the District of Colorado, cases typically move efficiently.

Frequently Asked Questions

Q: Will the rise in filings make my case take longer? A: No. Courts are equipped to handle volume; each case is decided on its own facts.

Q: Can I file bankruptcy on credit card debt? A: Yes — most unsecured credit card debt is fully dischargeable in Chapter 7.

Q: How much does it cost to file bankruptcy in 2026? A: Court filing fees are $338 (Chapter 7) or $313 (Chapter 13). Attorney fees vary; we offer flexible payment plans.

Q: Can I keep my tax refund if I file? A: Often yes — we help time the filing and protect what you’re entitled to.

Q: How soon after filing do collections stop? A: Usually within hours or the same day via the Automatic Stay.

Q: What about my house or car? A: Most clients keep both. Chapter 13 is excellent for catching up on missed payments.

Q: Is there a minimum debt amount to file? A: No — even modest debt can qualify if payments are unmanageable.

Ready for Your Fresh Start in 2026?

The 11% jump in bankruptcy filings shows that thousands of Americans are choosing relief over continued struggle. There is zero shame in using the legal tools created to help you.

At LONG & LONG P.C., we’ve guided hundreds of metro Denver and Colorado residents through Chapter 7 and Chapter 13 bankruptcy with compassion, expertise, and results. Consultations are always free, confidential, and with no obligation.

Take the first step today — call 303-832-2655 or complete our secure online form for a same-day or next-day appointment. We serve the entire Front Range and surrounding areas.

Don’t let debt control another month of your life. 2026 can be your year of financial freedom.

This article is for informational purposes only and does not constitute legal advice. Bankruptcy outcomes depend on your unique financial situation. Please consult a licensed bankruptcy attorney in your jurisdiction for advice specific to your case.

The short answer is: It’s possible in rare cases, but in most situations, no—your credit card accounts will likely be closed by the issuers once they learn of your bankruptcy filing. This holds true whether you’re filing Chapter 7 or Chapter 13 bankruptcy, though the details differ slightly between the two.

Bankruptcy provides powerful relief from overwhelming debt, including credit card debt, but it comes with trade-offs. Understanding what happens to your credit cards can help you make an informed decision about filing.

What Happens to Credit Cards in Bankruptcy?

Credit cards are unsecured debt, meaning they’re not tied to collateral like a house or car. In bankruptcy:

• Credit card balances are typically discharged (wiped out), so you’re no longer legally obligated to repay them. This constitutes one of the biggest advantages to filing bankruptcy.
• However, the credit card agreement is a contract. Once bankruptcy is filed, issuers often cancel accounts even if the balance is zero.

You must list all credit card accounts on your bankruptcy petition—hiding one isn’t allowed and can lead to serious issues.

Chapter 7 Bankruptcy and Credit Cards

Chapter 7 (liquidation bankruptcy) is the most common for individuals seeking quick relief from credit card debt. It usually discharges eligible unsecured debts in 3–6 months.

• If your card has a balance, the debt is discharged, but the issuer will almost certainly close the account.
• Even with a zero balance, most issuers cancel the card upon noticing the bankruptcy on your credit report.
• Reaffirming the debt (agreeing to repay it post-bankruptcy) is possible but rare and usually not recommended for unsecured debts like credit cards—it keeps the obligation alive.

In practice, very few people retain active credit cards after a Chapter 7 discharge.

Chapter 13 Bankruptcy and Credit Cards

Chapter 13 (reorganization bankruptcy) involves a 3–5 year repayment plan, often used to catch up on secured debts or protect assets.

• Credit card debt is treated as unsecured and included in your repayment plan—you typically pay a portion based on what you can afford.
• Remaining eligible debt may be discharged at the end of the plan.
• During the case, you generally cannot use existing credit cards without court approval (new charges could violate the plan).
• Issuers may still close accounts, though some might allow retention if payments stay current and the creditor agrees.

Chapter 13 offers more flexibility in some cases, but keeping open credit lines remains uncommon.

Rare Scenarios Where You Might Keep a Credit Card

While unusual, some exceptions exist:

• Zero-balance cards: If the account has no debt at filing and the issuer doesn’t cancel it (some smaller or store cards occasionally allow this).
• Creditor agreement: In limited cases, especially Chapter 13, a creditor might consent to keeping the account open.
• Secured or specific cards: Corporate cards or certain secured accounts sometimes survive, but personal consumer cards rarely do.

Success depends on the issuer’s policies—major banks often close accounts automatically.

Rebuilding Credit After Bankruptcy

Losing credit cards is difficult as credit cards can be both a benefit and a curse. But bankruptcy doesn’t mean permanent exclusion from credit. Many people rebuild successfully:

• Start with secured credit cards (deposit equals limit).
• Become an authorized user on a trusted family member’s card.
• Use credit-builder loans or responsible utility payments.
• Monitor your credit report and dispute errors.

Bankruptcy stays on your credit report for 10 years (Chapter 7) or 7 years (Chapter 13), but its impact rapidly diminishes with good payment habits.

Is Bankruptcy Right for You?

If credit card debt is overwhelming you—high interest, minimum payments you can’t afford, collections, or garnishments—bankruptcy can provide a fresh start. The loss of credit cards is temporary compared to the relief from debt.

Every situation is unique. Factors like your income, assets, total debt, and jurisdiction matter.

If you’re considering bankruptcy and wondering about your credit cards (or other debts), contact an experienced bankruptcy attorney for a free consultation. Call LONG & LONG P.C. NOW at 303-832-2655 or use the chat to request an appointment. We can review your specific circumstances, explain your options under Chapter 7 or Chapter 13, and help you decide the best path forward.

This blog post is for general informational purposes only and is not legal advice. Bankruptcy laws can vary by case and change over time. Always consult a qualified bankruptcy attorney for guidance tailored to your situation.

Often the medical office or hospital will sell their right to collect to a debt collector for pennies on the dollar. The professional debt collectors can then pursue you aggressively, despite the fact that their actions are regulated by the Fair Debt Collections Act. Whether you are paying your debt off in a Chapter 13 plan or liquidating your debt under Chapter 7, debt due to unpaid medical bills are likely to be a continuing reality until they are discharged under by a Bankruptcy Court.

UNSECURED DEBT – NO DIFFERENT THAN CREDIT CARD DEBT

            With rare exceptions, almost all medical debt is unsecured debt. As such, the law treats medical debt the same as credit card debt, unsecured loans from a lender, and is normally dischargeable in bankruptcy.  For various policy reasons, Congress decided that certain debts should be treated differently from others.Tax liability or other debts owed to government, not surprisingly, is priority debt that is nondischargeable.  Child support and spousal support, collectively referred to as domestic support obligations and even things such as debt incurred as a result of a drunk driving accident are nondischargeable (although debt incurred as a result of a normal car accident and not covered by auto insurance is dischargeable). When a nonpriority unsecured debtor obtains a judgment following a lawsuit they may become secure by placing a lien on your home. In some cases, said lien is avoidable in bankruptcy.

CHOICE BETWEEN CHAPTER 7 AND CHAPTER 13

            Chapter 7 bankruptcy, also known as liquidation, allows you to discharge your dischargeable debt without payment, as distinct from a Chapter 13 which requires a debtor to pay off some of their debt over time. There are different factors that will take a case out of chapter 7 and into a Chapter 13. Among them are:           

• Their income is too high; or               
• They obtained a bankruptcy discharge in the past eight years; or
• They want to pay off arrears on secured debt that they want to keep, usually their primary home or car/truck;
• They have too much disposable income;
• They need to pay off priority debt, such as taxes owed, over time.

CONTACT A BANKRUPTCY ATTORNEY AT LONG & LONG P.C.

            If you find yourself overwhelmed by unpaid medical bills like tens of millions of Americans you owe it to yourself and your family to speak with an experienced, patient and practical law firm.As a former Trustee for the United States Bankruptcy Court, Martin Long, of Long & Long, P.C. has the experience and knowledge of the bankruptcy code and law to help you through your time of difficulty. You can contact us by calling (303) 832-2655.

At LONG & LONG P.C., our experienced Denver bankruptcy attorneys help clients throughout Colorado understand how bankruptcy can halt aggressive creditor actions. Below, we’ll explain exactly how bankruptcy works to stop foreclosure, repossession, and wage garnishment — and what options may be best for your situation.

What Is the Automatic Stay in Bankruptcy?

The moment you file a bankruptcy petition in Colorado (either Chapter 7 or Chapter 13), an automatic stay goes into effect under federal bankruptcy law. This court order immediately prohibits most creditors from:

• Starting or continuing foreclosure proceedings
• Repossessing vehicles or other property
• Garnishing wages or bank accounts
• Making collection calls or sending demand letters
• Pursuing most lawsuits to collect debts

The automatic stay is one of the most powerful tools in bankruptcy and typically takes effect the instant your case is filed — often stopping a scheduled foreclosure sale or repossession with just hours to spare.

Can Bankruptcy Stop Foreclosure in Colorado?

Yes — filing bankruptcy can stop a foreclosure sale, even if it’s scheduled for the next day.

In Colorado, lenders must follow strict timelines for non-judicial foreclosures (the most common type). Once the automatic stay is in place:

• The foreclosure sale is halted
• The lender cannot proceed without first obtaining court permission (a “motion for relief from stay”)

Chapter 7 vs. Chapter 13 for Foreclosure

• Chapter 7 bankruptcy provides temporary relief. The stay typically lasts 3–4 months while the bankruptcy case is open. This gives you time to negotiate with your lender or explore other options, but it does not allow you to catch up on missed payments over time.
• Chapter 13 bankruptcy offers a longer-term solution. You can propose a 3–5 year repayment plan to cure mortgage arrears while keeping your home. As long as you make plan payments, the automatic stay remains in effect and protects your property.

Many Colorado homeowners choose Chapter 13 specifically to save their homes from foreclosure.

Can Bankruptcy Stop Vehicle Repossession?

Yes — bankruptcy can stop repossession before it happens and may even help you get a repossessed vehicle back in some cases.

If your lender has not yet taken your car, truck, or motorcycle, the automatic stay prevents repossession immediately upon filing.

Key Considerations for Vehicle Repossession in Colorado:

• If the vehicle was repossessed before you filed, recovery becomes more difficult (though Chapter 13 sometimes allows redemption or recovery if filed quickly).
• In Chapter 7, you may be able to keep your vehicle by reaffirming the loan or redeeming it for its current fair market value.
• In Chapter 13, you can often cram down the loan to the vehicle’s current value and pay it through your repayment plan at a potentially lower interest rate.

Colorado’s exemption laws also allow you to protect a certain amount of equity in your vehicle, helping you keep it even in Chapter 7.

Can Bankruptcy Stop Wage Garnishment in Colorado?

Yes — most wage garnishments stop immediately when you file for bankruptcy.

In Colorado, creditors with a court judgment can garnish up to 20% of your disposable earnings (depending on your income level). Common garnishable debts include credit cards, medical bills, and personal loans.

Once the automatic stay is in place:

• Creditors must stop garnishing your wages
• Any funds garnished shortly before filing may be recoverable

Important Exceptions

Bankruptcy does not automatically stop garnishments for:

• Child support or alimony
• Certain tax debts
• Federal student loans (in most cases)

However, Chapter 13 can sometimes restructure priority debts like back taxes or domestic support arrears into an affordable repayment plan.

Chapter 7 vs. Chapter 13: Which Is Right for Stopping Creditor Actions?

A qualified Colorado bankruptcy attorney can help you determine which chapter best fits your goals.

Limitations: When Bankruptcy May Not Stop Collection Actions

While the automatic stay is powerful, it’s not absolute:

• Repeated bankruptcy filings may limit or eliminate the stay
• Secured creditors can request court permission to proceed
• Certain debts (domestic support, recent taxes, student loans) have limited protection

Acting quickly is essential — the sooner you file, the stronger the protection.

Take Control of Your Financial Future Today

If you’re facing foreclosure, repossession, or wage garnishment in Colorado, bankruptcy may provide the immediate relief you need. The automatic stay can stop creditor actions in their tracks and give you time to rebuild.

Don’t wait until it’s too late. Contact an experienced Denver bankruptcy attorney for a free consultation to discuss your specific situation and explore whether Chapter 7 or Chapter 13 is right for you.

Call LONG & LONG P.C. NOW to Schedule Your Free Consultation Today. Phone: 303-832-2655 Serving Denver, Aurora, Lakewood, and all of Colorado.

Debt and Garnished Bank Accounts Long & Long

Wage and Bank Account Garnishment and Bankruptcy

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Bankruptcy laws are complex, and outcomes vary by individual circumstances. Consult a qualified Colorado bankruptcy attorney for advice tailored to your situation.

These rules come from federal bankruptcy law (the U.S. Bankruptcy Code) and apply nationwide, including in Colorado and the District of Colorado Bankruptcy Court in Denver. The exact waiting period depends on:

• The chapter of your previous bankruptcy (Chapter 7 or Chapter 13)
• The chapter you want to file now
• Whether you received a discharge in your prior case

Missing these time limits doesn’t prevent you from filing — but you won’t receive a discharge if you file too soon.

Key Waiting Periods for Receiving a Bankruptcy Discharge (2025 Rules)

The clock starts on the filing date of your previous case (not the discharge date). Here’s a clear breakdown:

Important: These are the standard federal rules under 11 U.S.C. §§ 727(a)(8)–(9) and 1328(f). Colorado follows them exactly — there are no state-specific variations for these time bars.

Exceptions That Can Shorten (or Eliminate) the Wait

• Prior Chapter 13 paid 100% of unsecured claims → No wait for a new Chapter 7.
• Prior Chapter 13 paid at least 70%, plan in good faith, and your “best effort” → No mandatory wait for Chapter 7.
• If your previous case was dismissed (not discharged), the waiting periods usually don’t apply — you can often refile immediately (unless the dismissal was “with prejudice” for abuse).

Why Do These Time Limits Exist?

Congress added these rules in 2005 (BAPCPA) to prevent abuse of the bankruptcy system while still allowing honest debtors a true fresh start when life throws unexpected hardships — medical bills, job loss, divorce, etc. — even after a prior filing.

Can You File Bankruptcy Before the Waiting Period Ends?

Yes — and it can still help! You get the automatic stay to stop collections, foreclosures, and garnishments immediately upon filing. Many Denver filers use this strategy:

• File Chapter 13 soon after a Chapter 7 (even before 4 years) to catch up on mortgage arrears, car payments, or nondischargeable debts like recent taxes — without needing a full discharge.
• This is sometimes called a “Chapter 20” bankruptcy (7 + 13).

However, without a discharge, unsecured debts from the new case remain (though you may pay a portion through a plan).

Special Considerations for Denver and Colorado Residents

• The U.S. Bankruptcy Court for the District of Colorado (Denver Division) handles all cases.
• Colorado’s generous exemptions (homestead from $250,000 to $350,000 (for seniors/disabled) often let filers keep more property regardless of chapter.
• Local trustees and judges strictly enforce the federal waiting periods — always check your prior case filing date.

What Should You Do Next?

Timing mistakes can waste time and money. An experienced Denver bankruptcy attorney can:

• Pull your prior case records
• Calculate exact eligibility dates
• Advise if filing now (without discharge) makes sense
• Explore alternatives like debt settlement or restructuring

Don’t guess — the rules are complex, and a quick consultation is free.

Facing debt again in Denver, Aurora, Centennial, Lakewood, or anywhere in Colorado? Contact our experienced bankruptcy team today for a free case review. We help Coloradans navigate second (and even third) filings every year. Call 303-832-2655 or fill out our online form to get started on your fresh start.

/bankruptcy-blog/prior-bankruptcy-filing-new-bankruptcy/.

Bankruptcies Rise 13.1 Percent Over Previous Year

If you’re weighing your options, the big question is: debt consolidation or bankruptcy? Both can provide relief, but they work very differently. Debt consolidation simplifies payments without the stigma of court involvement, while bankruptcy offers a court-protected fresh start—often discharging debts entirely.

As experienced bankruptcy attorneys, we’ve helped thousands navigate this crossroads. In this guide, we’ll break down debt consolidation vs. bankruptcy, including pros, cons, and key factors to consider in 2025’s economy. By the end, you’ll know when to consolidate debt or file bankruptcy—and why consulting a local bankruptcy attorney is your smartest next step.

What Is Debt Consolidation? A Simpler Path to Paying Off Debt

Debt consolidation involves combining multiple debts into a single payment, typically through a new loan or program. This could mean a debt consolidation loan, balance transfer credit card, or enrolling in a debt management plan (DMP) through a credit counseling agency.

Here’s how it works:

• Apply for a new loan: Use the funds to pay off existing debts, leaving you with one monthly payment at a potentially lower interest rate.
• Debt management plan: A nonprofit agency negotiates lower rates with creditors and handles payments on your behalf.
• No court filing required—it’s a private financial strategy.

In 2025, with interest rates stabilizing after recent hikes, debt consolidation loans average around 8-12% APR for qualified borrowers, making them attractive if you have decent credit (score above 670).

Pros of Debt Consolidation

• Lower interest and payments: Combine high-interest credit card debt (often 20%+ APR) into one loan, saving thousands in interest over time.
• Credit score protection: No major dings like bankruptcy; in fact, on-time payments can boost your score.
• Simplicity: One bill instead of juggling multiple due dates.
• Quick to start: Approval can happen in days, without legal fees.

Cons of Debt Consolidation

• Requires good credit: If your score is below 600, you may not qualify—or face high rates defeating the purpose.
• No debt discharge: You still repay everything.
• Doesn’t reduce principal: You’re repaying the full amount, just restructured. If your income is unstable, you risk defaulting on the new loan.
• Fees add up: Origination fees (1-5%) and counseling costs can eat into savings.
• Longer payoff time: Extending terms (e.g., 5-7 years) means more total interest paid.

Debt consolidation shines for those with manageable debt loads—say, under $50,000 in unsecured debt—and steady extra income to cover the new payment.

What Is Bankruptcy? Your Legal Lifeline for Overwhelming Debt

Bankruptcy is a federal court process that helps individuals eliminate or reorganize debts when they’re unmanageable. The two most common types for consumers are Chapter 7 (liquidation) and Chapter 13 (repayment plan).

• Chapter 7 Bankruptcy: Discharges most unsecured debts (credit cards, medical bills) in 3-6 months. Non-exempt assets may be sold, but most filers keep essentials like homes and cars.
• Chapter 13 Bankruptcy: Creates a 3-5 year repayment plan for secured debts (mortgage, car loans) while protecting assets. Unsecured debts may be partially paid or discharged.

In 2025, individual bankruptcy filings are up 11% in the first half of the year, with Chapter 7 leading at a 15% increase—a sign that economic pressures like inflation and job instability are pushing more people toward this option.

Pros of Bankruptcy

• Immediate relief: The “automatic stay” stops collections, wage garnishments, and lawsuits the moment you file.
• Debt discharge: Chapter 7 wipes out eligible debts entirely—no more payments on discharged amounts.
• Predictable timeline: Chapter 13 plans are court-enforced, shielding you from creditor harassment.
• Fresh start: Rebuild credit faster than you think—many see scores rise within 1-2 years post-discharge.
• Cost-effective long-term: Attorney fees are often less than years of interest payments.

Cons of Bankruptcy

• Credit impact: Stays on your report for 7-10 years, possibly dropping scores initially. Impact usually short-term.
• Asset risk: In Chapter 7, non-exempt property (e.g., luxury items) could be liquidated—though exemptions protect most necessities.
• Not all debts qualify: Student loans, child support, and recent taxes survive discharge.
• Public record: Filings are public, though rarely scrutinized.
• Eligibility hurdles: Means test for Chapter 7 requires income below your state’s median.

Bankruptcy is ideal for most debt situations—with little disposable income or aggressive creditors.

Debt Consolidation vs. Bankruptcy: Head-to-Head Comparison

Wondering should I consolidate debt or file bankruptcy? It depends on your finances, but here’s a quick breakdown:

When to Choose Debt Consolidation Over Bankruptcy

• You have a solid job and can afford a single, lower payment, for years.
• Your total debt is under $30,000-$50,000, mostly revolving credit.
• Credit score is salvageable, and you want to avoid public records.
• Example: A family with $20,000 in credit card debt at 22% APR could save $5,000+ in interest via consolidation.

When Bankruptcy Beats Debt Consolidation

• Debts exceed 50% of your annual income, and payments eat >40% of take-home pay.
• Creditors are suing, garnishing wages, or repossessing assets.
• You’ve tried consolidation before but fell behind again.
• In 2025’s rising bankruptcy trend, Chapter 13 is surging 8.3% for those protecting homes from foreclosure.

Tax tip: Forgiven debt in consolidation can trigger taxes, unlike bankruptcy discharges.

2025 Trends: Why Now’s the Time to Act on Debt Relief

With household debt-to-GDP at 68.1% in Q1 2025—down slightly but still high—economic uncertainty lingers. Corporate bankruptcies hit 63 in June alone, signaling broader ripples for consumers. If you’re searching “eliminate credit card debt” or “stop wage garnishment,” know that waiting worsens the cycle—interest compounds, and stress mounts.

Final Thoughts: Get Personalized Advice from a Bankruptcy Attorney

Debt consolidation vs. bankruptcy isn’t one-size-fits-all. If you can consolidate without strain, it’s a gentler road. But for true overload, bankruptcy delivers freedom faster.

At LONG & LONG P.C., we specialize in bankruptcy. Schedule a free consultation today to review your finances, explore Chapter 7 bankruptcy or Chapter 13 repayment plans, and chart your path to debt-free living. Don’t let debt define your future—call (303) 832-2655 or visit our site for a no-obligation chat.

How to Improve Your Credit Score After Declaring Bankruptcy in Denver

With economic pressures like inflation and job instability, more people are turning to bankruptcy as a potential solution. But is it the right choice for you?

As an experienced bankruptcy attorney, I often guide clients through this tough decision. Filing for bankruptcy isn’t a one-size-fits-all answer—it’s a legal tool that can provide relief now but comes with some long-term impacts. In this post, we’ll explore the pros and cons of filing bankruptcy, signs it’s time to consider it, alternatives, and when to seek professional advice. Remember, this is general information, not personalized legal advice. Consult a qualified bankruptcy lawyer to evaluate your situation.

What Is Bankruptcy and How Does It Work?

Bankruptcy is a federal legal process that helps individuals and businesses eliminate or restructure overwhelming debt. When you file, it triggers an “automatic stay,” halting most collection activities, lawsuits, and wage garnishments immediately.

There are two main types for individuals:

• Chapter 7 Bankruptcy: Often called “liquidation” bankruptcy, it wipes out unsecured debts like credit cards and medical bills. Non-exempt assets may be sold to pay creditors, but most people keep their essentials (e.g., home equity up to exemption limits).
• Chapter 13 Bankruptcy: A “reorganization” plan where you repay some or all debts over 3-5 years, ideal if you have steady income or want to protect assets like a home from foreclosure.

The choice between Chapter 7 and Chapter 13 depends on your income, assets, and debt type. For instance, if your income is below your state’s median, you may qualify for Chapter 7.

Signs You Should Consider Filing for Bankruptcy

Not everyone needs to file, but certain red flags suggest it’s worth exploring:

• Unmanageable Debt: If minimum payments exceed 50% of your income or you’re only paying interest without reducing principal.
• Harassment from Creditors: Constant calls, threats, or lawsuits from debt collectors.
• Maxed-Out Credit Cards: High balances with no repayment plan in sight.
• Foreclosure or Repossession Threats: You’re at risk of losing your home or car.
• Medical or Job Loss Debt: Unexpected expenses that spiraled out of control.

You are not alone. In 2025, individual Chapter 7 filings have climbed 15% in the first half of the year alone, reflecting broader financial strain. Total Bankruptcy Filings Increased 10 Percent in the First Half of 2025 — Epiq Global

If these signs resonate, bankruptcy could offer a fresh start—but let’s weigh the benefits and drawbacks first.

Pros of Filing for Bankruptcy

Filing bankruptcy has clear advantages, especially if debt is ruining your life. Here are the key pros:

1. Immediate Relief from Creditors: The automatic stay stops all collection efforts, giving you breathing room to regroup. Bankruptcy: How It Works, Types, and Consequences — Experian
2. Debt Discharge: Unsecured debts like credit cards, personal loans, and medical bills can be wiped out entirely in Chapter 7, potentially eliminating tens of thousands in obligations.Pros and Cons of Filing Bankruptcy — Debt.org
3. Fresh Financial Start: It allows you to rebuild without the weight of past debts, often leading to better financial habits long-term.
4. Potential Credit Improvement: If your score is already low due to delinquencies, bankruptcy can stabilize it faster than ongoing defaults. Scores can rebound to 700+ within 1-2 years with responsible behavior.Pros and Cons of Filing for Bankruptcy — LendingTree
5. Asset Protection: Exemptions shield essentials like your home (up to certain equity limits), car, retirement accounts, and personal items.

For many, these pros mean peace of mind and a path to financial stability.

Cons of Filing for Bankruptcy

While beneficial, bankruptcy isn’t without downsides. Consider these before deciding:

1. Credit Score Impact: Your score could drop 100-200 points initially and stay on your report for 10 years. Loans may be harder short-term but the impact quickly diminishes.
2. Asset Loss: In Chapter 7, non-exempt property (e.g., luxury items or second homes) could be sold.
3. No Discharge for All Debts: Student loans, child support, recent taxes, and secured debts (like mortgages) often survive bankruptcy.Bankruptcy — WashingtonLawHelp.org
4. Filing Fees and Costs: Court fees start at $300-$400, plus attorney fees ($2,000-$3,500 typically). It’s not “inexpensive bankruptcy,” despite searches for affordable options.
5. Emotional and Social Stigma: Some feel shame, though it’s a common tool—over 400,000 non-business filings occurred in the year ending June 2025. Bankruptcy Filings Rise 11.5 Percent Over Previous Year — U.S. Courts (Published July 31, 2025). Think of it as a business decision.

Chapter 7 vs. Chapter 13: Which Is Right for You?

• Chapter 7: Best for low-income filers with mostly unsecured debt. Process takes 4-6 months; most debts discharged.
• Chapter 13: Suited for higher earners or those with assets to protect. Requires a repayment plan but lets you catch up on mortgages.

Alternatives to Filing Bankruptcy

Before jumping to bankruptcy, explore these options. They might resolve your debt without the long-term credit hit:

1. Credit Counseling: Non-profit agencies review your finances and create a budget. It’s required pre-bankruptcy anyway and often free or low-cost.
2. Debt Consolidation: Combine debts into one loan with lower interest. Good if you have decent credit; reduces monthly payments. Personal Bankruptcy Inquiries Surging? Alternatives to Consider Now — CBS News
3. Debt Management Plan (DMP): Through counseling, negotiate lower rates and fixed payments. Takes 3-5 years but avoids bankruptcy.
4. Debt Settlement: Negotiate to pay a lump sum less than owed. Risky—can damage credit and trigger taxes on forgiven debt—but cheaper than full repayment. Alternatives to Bankruptcy — AF Morgan Law
5. Negotiate Directly with Creditors: Many accept hardship plans or reduced settlements. Or, build a strict budget and emergency fund to pay down debt organically. Here’s your clickable link: Alternatives to Bankruptcy — TexasLawHelp.org
6. Balance Transfer Cards: For smaller debts, transfer to 0% APR cards temporarily.

Our office can help you with debt settlement and direct negotiation with creditors, alternatives to bankruptcy. These alternatives work best for manageable debt and a good source of income or asset. If creditors are suing or garnishing wages, bankruptcy might be unavoidable.

When Should You Consult a Bankruptcy Attorney?

You shouldn’t decide alone—should I file for bankruptcy? It is too complex for DIY. A bankruptcy lawyer can:

• Assess eligibility and exemptions.
• Maximize debt discharge.
• Navigate paperwork to avoid denial.

With filings surging in 2025, experienced attorneys are busier, so act soon. July US Corporate Bankruptcy Filings Hit Highest Monthly Total in 5 Years — S&P Global

Final Thoughts: Is Bankruptcy Right for You?

Deciding should I file for bankruptcy boils down to your financial picture. If debt is insurmountable and alternatives fail, it can provide the relief you need. But with rising filings in 2025, it’s clear many are facing similar struggles— you’re not alone.

At LONG & LONG P.C. we specialize in helping clients like you explore options, from alternatives to bankruptcy to full Chapter 7 or 13 filings. Take the first step toward financial freedom—call now at 303-832-2655 or use our website contact link to schedule your free consultation. What Is Bankruptcy? A Complete Guide to Understanding Your Options

Disclaimer: This post is for informational purposes only and not legal advice. Bankruptcy laws vary by state and situation.

If you’re considering filing for bankruptcy in Colorado, understanding state-specific exemptions is crucial. These exemptions determine what property you can keep during Chapter 7 or Chapter 13 bankruptcy. Colorado opts out of federal exemptions, meaning residents must use the state’s generous protections for homes, vehicles, retirement accounts, and more. Attorney Martin Long is a former Trustee for the U.S. Bankruptcy Court. At LONG & LONG, our experienced Denver bankruptcy attorneys and Centennial bankruptcy lawyers help clients maximize these exemptions to safeguard their assets and achieve a fresh financial start.

Whether you’re facing overwhelming debt or need guidance on the bankruptcy process in Colorado, contact us today at 303-832-2655 for a free consultation in Denver or Centennial.

Why Bankruptcy Exemptions Matter

In Chapter 7 bankruptcy, non-exempt assets may be liquidated to pay creditors, but exemptions protect essential property. In Chapter 13 bankruptcy, exemptions influence your repayment plan. Colorado’s exemptions are adjusted periodically and can often be doubled for married couples filing jointly (unless noted otherwise). Note: These apply to cases filed in 2025; always consult a professional for personalized advice.

Below is a comprehensive list of Colorado bankruptcy exemptions based on current statutes.

Key Colorado Bankruptcy Exemptions for 2025

Use the table below for a quick overview or read the detailed sections for conditions.

Homestead Exemption Details

Protect your primary residence or mobile home with up to $250,000 in equity. This rises to $350,000 for seniors or those with disabilities, making Colorado one of the more protective states for homes.

Vehicle and Tools Exemptions

Keep your car or truck safe with the $15,000 motor vehicle exemption ($25,000 for eligible filers). For business owners, the robust tools of the trade exemption cover essential equipment up to $60,000.

Personal Property and Other Exemptions

Everyday items like clothing, food, and household goods have specific limits, but most essentials are covered. Retirement accounts are fully protected to secure your future.

Doubling Exemptions for Married Couples

In joint filings, many exemptions (e.g., personal property) can be doubled for shared assets. However, homestead and agricultural exemptions cannot. Our Denver metro and Centennial bankruptcy lawyers at LONG & LONG can help you navigate these rules.

No Wildcard Exemption in Colorado

Unlike some states, Colorado does not offer a wildcard exemption for flexible asset protection. Focus on categorizing your property correctly.

Contact LONG & LONG for Bankruptcy Help

Bankruptcy exemptions can be complex, and mistakes could cost you valuable assets. Located in Denver, Colorado and Centennial, Colorado, and serving Aurora and the Front Range, LONG & LONG specializes in Colorado bankruptcy law. Call 303-832-2655 today to discuss your options with a trusted Denver bankruptcy attorney.

👉 Using the Colorado Homestead Exemption in Bankruptcy

Related Resources:

• Colorado Bankruptcy Court
• Official Colorado Statutes

What is Debt Relief?

Debt relief refers to strategies that help individuals reduce, manage, or eliminate overwhelming debt. These strategies can include debt consolidation, debt settlement, credit counseling, or bankruptcy. Each option has its benefits and drawbacks, but bankruptcy stands out for its ability to provide a legally protected path to a fresh financial start.

How Bankruptcy Provides Debt Relief

Bankruptcy is a federal legal process designed to help individuals and businesses address unmanageable debt. By filing for bankruptcy, you can either eliminate certain debts or restructure them into an affordable repayment plan. The process begins with filing a petition in bankruptcy court, which triggers an automatic stay. This powerful tool immediately halts creditor actions like collection calls, lawsuits, wage garnishments, and even foreclosure proceedings.

Bankruptcy offers two main options for individuals: Chapter 7 and Chapter 13. Each provides unique benefits for debt relief, depending on your financial situation.

Chapter 7 Bankruptcy: Wipe Out Debt

Chapter 7 bankruptcy, often called “liquidation bankruptcy,” is ideal for those with limited income who can’t keep up with debt payments. It eliminates most unsecured debts, such as credit card balances, medical bills, and personal loans, typically within 4–6 months. A bankruptcy trustee may sell non-exempt assets to pay creditors, but most filers keep their property due to state and federal exemptions.

Who qualifies? You must pass a means test, which compares your income to the median income in your state. If your income is too high, Chapter 13 may be a better option.

Chapter 13 Bankruptcy: Restructure Your Debt

Chapter 13 bankruptcy, known as the “wage earner’s plan,” allows you to keep assets like your home or car while repaying debts over a 3- to 5-year plan. This is ideal for individuals with regular income who want to catch up on missed mortgage or car payments while managing other debts. At the end of the plan, remaining eligible debts may be discharged.

Who qualifies? Chapter 13 is suited for those with steady income and debts below certain limits (e.g., $465,275 for unsecured debts as of 2025).

Other Debt Relief Options

While bankruptcy is a powerful tool, it’s not the only path to debt relief. Here are some alternatives to consider, and how they compare:

• Debt Consolidation: Combines multiple debts into a single loan with a lower interest rate. This can simplify payments but doesn’t reduce the total debt owed.
• Debt Settlement: Negotiates with creditors to reduce the amount you owe. This can save money but may harm your credit and result in taxable forgiven debt.
• Credit Counseling: Works with a nonprofit agency to create a debt management plan. Payments are restructured, but you must still repay the full debt over time.

Unlike these options, bankruptcy offers legal protections, such as the automatic stay, and can fully discharge certain debts. However, it may impact your credit for 7–10 years, so consulting a bankruptcy attorney is key to choosing the best path.

Benefits of Bankruptcy for Debt Relief

Bankruptcy offers unique advantages for those struggling with debt:

• Stop Creditor Harassment: The automatic stay halts collection efforts, giving you peace of mind.
• Eliminate or Restructure Debt: Chapter 7 wipes out eligible debts, while Chapter 13 creates affordable payments.
• Protect Assets: Exemptions in Chapter 7 and repayment plans in Chapter 13 help you keep your home, car, and other essentials.
• Fresh Start: Bankruptcy clears the slate, allowing you to rebuild your financial future.

Is Bankruptcy Right for You?

Deciding to file for bankruptcy depends on your unique situation. Ask yourself:

• Are you unable to pay bills despite cutting expenses?
• Are you facing foreclosure, repossession, or wage garnishment?
• Do you have mostly unsecured debts (e.g., credit cards, medical bills) or secured debts (e.g., mortgage, car loan)?

A bankruptcy attorney can assess your income, debts, and goals to recommend the best debt relief strategy. For example, Chapter 7 may suit those with high unsecured debt and low income, while Chapter 13 is better for protecting assets or catching up on missed payments.

How to Get Started with Bankruptcy

Here’s a quick overview of the bankruptcy process:

1. Consult a Bankruptcy Attorney: Meet with an experienced attorney to review your finances and explore Chapter 7 or Chapter 13.
2. Complete Credit Counseling: Take a mandatory course from an approved agency before filing.
3. File Your Petition: Submit detailed financial paperwork to the bankruptcy court to start the process.
4. Attend the 341 Meeting: Meet with a trustee and creditors (if they attend) to discuss your case.
5. Follow Through: In Chapter 7, eligible debts are discharged in months. In Chapter 13, you’ll make payments for 3–5 years.
6. Complete Financial Education: Take a debtor education course to receive your discharge.

Why Choose LONG & LONG for Debt Relief?

Attorney Martin Long is a Former Trustee for the U.S. Bankruptcy Court. At LONG & LONG, we understand the stress of financial hardship. Our dedicated bankruptcy attorneys in the Denver and Colorado area have helped countless clients achieve debt relief through bankruptcy and other solutions. We provide personalized guidance, from evaluating your options to securing your financial fresh start.

Ready to break free from debt? 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 find the best path to financial freedom.

Frequently Asked Questions About Debt Relief and Bankruptcy

Will bankruptcy ruin my credit forever?

No. While bankruptcy stays on your credit report for 7–10 years, you can rebuild credit with responsible financial habits, like paying bills on time.

Can bankruptcy stop foreclosure?

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

What debts can’t be discharged?

Most student loans, child support, alimony, and certain taxes are not dischargeable, but an attorney can clarify what applies to you.

Take the first step toward debt relief today. Contact LONG & LONG now to discuss how bankruptcy or other solutions can help you achieve a brighter financial future. Operators are standing by to assist you 24/7. Here’s the clickable version of your link:

Denver Bankruptcy Attorney Near Me: Your Guide to Financial Relief

Why Choose a Denver Bankruptcy Attorney?

Filing for bankruptcy is a significant decision that requires personalized guidance from a skilled attorney familiar with Colorado’s bankruptcy laws. A local Denver bankruptcy attorney offers several advantages:

• Unmatched Local Expertise: Attorney Martin Long is a former Chapter 7 Trustee for the U. S. Bankruptcy Court. Our attorneys at Long & Long understand the nuances of Colorado bankruptcy courts, including the U.S. Bankruptcy Court for the District of Colorado, ensuring your case is handled efficiently.
• Personalized Service: Unlike large firms, we provide one-on-one attention, ensuring you feel supported throughout the process. Our Centennial office, conveniently located next to I-25 and Arapahoe Road, offers easy access throughout the Front Range, flexible hours and free parking for easy access.
• Comprehensive Support: From initial consultations to post-bankruptcy credit repair advice, we help you navigate every step, including the mandatory pre- and post-bankruptcy counseling courses.

Understanding Chapter 7 and Chapter 13 Bankruptcy

Bankruptcy laws offer different options depending on your financial situation. Here’s a breakdown of the two most common types for individuals:

Chapter 7 Bankruptcy: A Fresh Start

Chapter 7, often called “liquidation bankruptcy,” is ideal for individuals with limited income who need to discharge unsecured debts like credit card balances or medical bills. To qualify, you must pass the “means test,” which compares your income to Colorado’s median income for your household size.

• Benefits: Discharges most unsecured debts, stops wage garnishments, and halts creditor harassment through an automatic stay.
• Process: Involves disclosing all income, debts, and assets. Our attorneys at Long & Long help identify exempt assets (like your home or car) to protect them from liquidation.
• Timeline: Typically takes 4-6 months, with a “Meeting of Creditors” where our former U.S. Bankruptcy Court Trustee, Martin E. Long, guides you through questioning under oath.

Chapter 13 Bankruptcy: Reorganization for Stability

Chapter 13, known as “reorganization bankruptcy,” is suitable for those with regular income who want to keep non-exempt assets, like a home facing foreclosure. It involves a 3-5 year repayment plan tailored to your budget.

• Benefits: Prevents foreclosure, allows you to “strip off” second mortgages, and restructures debts into manageable payments.
• Process: You submit payments to a trustee, who distributes them to creditors based on priority. Our attorneys ensure your repayment plan is feasible and compliant.
• Who Qualifies: Ideal for those who don’t pass the Chapter 7 means test or have non-exempt assets or non-dischargeable debts like taxes or child support.

Why Long & Long Stands Out

At Long & Long, we’re committed to making bankruptcy accessible and stress-free. Here’s why Denver residents trust us:

• Experience: Attorney Martin E. Long, a former U.S. Bankruptcy Court Trustee, has conducted thousands of bankruptcy cases, offering unmatched insight into the process.
• Affordability: We offer free consultations, affordable fees (Chapter 7: $1,700-$3,000+; Chapter 13: $4,500+), and flexible payment plans to ease financial strain.
• Client-Centered Approach: We prioritize your peace of mind, providing 24/7 access to our team and clear explanations of each step. Our clients praise our compassion and professionalism, with reviews highlighting our ability to navigate complex cases.
• Convenient Location: Our Centennial office serves metro Denver, Aurora, Littleton, Englewood, Highlands Ranch, Castle Rock, Colorado Springs and beyond, with virtual consultations available for those outside the metro area.

Common Reasons to File for Bankruptcy in Denver

Life’s challenges can lead to overwhelming debt. Common reasons Denver residents file for bankruptcy include:

• Medical Bills: Unexpected healthcare costs are a leading cause of bankruptcy, even for insured individuals.
• Job Loss or Income Disruption: Unemployment or reduced income can make it impossible to keep up with debt payments.
• Credit Card Debt: High-interest credit card balances can spiral out of control during financial hardship.
• Foreclosure or Wage Garnishment: Bankruptcy’s automatic stay can halt foreclosure and garnishment, giving you time to regroup.

What to Expect When Working with Long & Long

1. Free Consultation: Schedule a no-obligation consultation by calling (303) 832-2655 or visiting www.denverbankruptcylawyer.net. Bring details of your debts, income, and expenses for a thorough evaluation.
2. Document Preparation: We’ll provide a Chapter 7 Timeline, intake sheet, and fee agreement via DocuSign for easy signing. Complete the intake sheet, and we’ll review it promptly.
3. Counseling Courses: Complete the required pre- and post-bankruptcy counseling courses (about 1.5 hours each, at a nominal cost) to meet court requirements.
4. Filing and Representation: We handle all paperwork and strategies and represent you at the Meeting of Creditors, ensuring a smooth process.
5. Post-Bankruptcy Support: We offer guidance on rebuilding your credit, helping you achieve a 700+ credit score within 24 months.

Debts That Cannot Be Discharged

Not all debts are dischargeable in bankruptcy. These include:

• Child support and alimony
• Most student loans
• Certain taxes
• Criminal fines or restitution

Our attorneys will review your debts to determine which can be discharged and advise on the best course of action.

Take the First Step Toward Financial Freedom

If you’re searching for a “Denver bankruptcy attorney near me,” Long & Long is here to help. With decades of experience, a client-first approach, and a commitment to affordability, we’ll guide you through Chapter 7 or Chapter 13 bankruptcy to secure a brighter financial future. Don’t let debt control your life—call (303) 832-2655 or visit www.denverbankruptcylawyer.net to schedule your free consultation today. Also check out our posts at: Here’s your clickable website link:

👉 Getting Credit Cards After Filing for Bankruptcy

👉 What is Bankruptcy? A Complete Guide to Understanding Your Options

Disclaimer: The information provided is for general purposes only and does not constitute legal advice.

Action Steps to Ensure Your Bankruptcy Discharge

1. Verify Your Account Status with Secured Creditors 

Contact your mortgage company and other secured lenders in writing to confirm that your accounts are current. This includes verifying that you’ve paid any additional fees they may have charged related to your bankruptcy, such as costs for filing a proof of claim. Request a written statement from each lender confirming your account is up to date.

2. Stay Ahead on Payments 

To avoid any last-minute issues, we strongly recommend staying one month ahead on both your Chapter 13 plan payments to the trustee and your payments to secured creditors (e.g., mortgage or car loans). Maintaining this buffer until your discharge is granted will help ensure you meet all requirements, even if unexpected delays or fees arise.

3. Contact your Attorney with Questions 

Always contact your attorney 4 to 5 months before the end of the Plan to make sure you are on tract to receive your discharge.

Why These Steps Matter

Under 11 U.S.C. § 1328, the bankruptcy court requires strict compliance with your Chapter 13 plan to grant a discharge, which eliminates eligible debts and completes your bankruptcy case. Missing even a single payment or failing to address lender fees could jeopardize your discharge, prolonging financial stress. By staying proactive and working with your Denver bankruptcy attorney, you can avoid these pitfalls and secure your fresh start.

You’re Almost There!

Reaching the final months of your Chapter 13 plan is a significant milestone. With just a few steps left, you’re on the verge of achieving debt relief and financial freedom.

What is Bankruptcy? A Complete Guide to Understanding Your Options

Considering a Chapter 13 bankruptcy? Contact our experienced Denver bankruptcy attorneys today for personalized guidance. Schedule a free consultation with Martin Long of LONG & LONG by calling 303-832-2655 or visiting Denver Bankruptcy Lawyer | Centennial Chapter 7 & 13 Bankruptcy Attorney | LONG & LONG . We’re here to help you navigate the U.S. Bankruptcy Court for the District of Colorado and achieve your financial goals.

How Does Bankruptcy Work? A Step-by-Step Guide to Debt Relief

What is Bankruptcy? A Complete Guide to Understanding

How Does Bankruptcy Work? A Step-by-Step Guide to Debt Relief

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.

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Why Tax Refunds Matter in Bankruptcy

Tax refunds are considered part of your bankruptcy estate, meaning they could be subject to scrutiny by the bankruptcy trustee. In Chapter 7 bankruptcy, a refund might be treated as an asset that could be used to pay creditors. In Chapter 13 bankruptcy, it could affect your repayment plan. Spending your refund improperly before filing could lead to accusations of hiding assets or fraud, potentially jeopardizing your case. To avoid issues, you need to know what’s allowed and what’s not.

General Guidelines for Spending Tax Refunds

Before diving into specifics, here’s a key principle: Bankruptcy courts expect you to use your tax refund for reasonable and necessary expenses. Lavish or non-essential spending can raise red flags and may be seen as an attempt to hide assets from creditors. Always consult with a bankruptcy attorney before spending your refund to ensure compliance with local bankruptcy rules.

Here are some general do’s and don’ts:

• Do: Spend on essential living expenses or debts that align with your normal budget.
• Don’t: Make large, luxury purchases or transfer the refund to someone else to “protect” it.

Now, let’s break down what you can safely spend your tax refund on before filing bankruptcy.

Acceptable Ways to Spend Your Tax Refund

The following expenses are generally considered reasonable by bankruptcy courts, as they reflect typical household needs or financial obligations. However, keep receipts and documentation to prove how the money was used.

1. Everyday Living Expenses

You can use your tax refund to cover basic necessities, including:

• Groceries and household supplies
• Rent or mortgage payments
• Utilities (electricity, water, internet, etc.)
• Transportation costs (gas, public transit, or car maintenance)

Why It’s Okay: These expenses are essential for maintaining your household and are unlikely to be questioned unless the amounts are excessive.

Tip: Stick to your usual spending patterns. For example, don’t buy a year’s worth of groceries at once, as this could look like an attempt to “use up” the refund.

2. Medical Expenses

Paying for healthcare costs is typically allowed, such as:

• Doctor or dentist visits
• Prescription medications
• Urgent medical procedures

Why It’s Okay: Courts recognize medical care as a priority, especially if it’s necessary to maintain your health or ability to work.

Tip: If you’re catching up on overdue medical bills, check with your attorney to ensure the timing doesn’t raise suspicion, and do not pay the creditor $600 or more.

3. Car Repairs or Maintenance

Using your refund for vehicle-related expenses is often permissible, including:

• Oil changes or tire replacements
• Repairs to keep your car operational
• Car insurance payments

Why It’s Okay: A functioning vehicle is often essential for work and daily life, especially if you don’t have access to public transportation.

Tip: Avoid buying a new car or making luxury upgrades, as these could be seen as non-essential.

4. Paying Certain Debts

You can use your refund to pay some debts, but be cautious:

• Secured debts: Payments on your mortgage or car loan are generally fine, as they protect assets you want to keep.
• Regular monthly bills: Paying utility bills in your normal amounts is typically safe.
• Court-ordered obligations: Payments like child support or alimony are almost always acceptable.

Why It’s Okay: These payments show you’re maintaining financial responsibilities, not hiding money.

Warning: Avoid paying off large amounts ($600 or more) to one creditor (especially friends or family) right before filing, as this could be considered a “preferential transfer” and undone by the trustee.

5. Legal Fees for Bankruptcy

Using your tax refund to pay your bankruptcy attorney or filing fees is usually allowed.

Why It’s Okay: Courts recognize the need to fund your bankruptcy case, and legal fees are considered a legitimate expense.

Tip: Ensure the payment is reasonable and documented to avoid any misinterpretation.

What to Avoid Spending Your Tax Refund On

Certain spending habits can jeopardize your bankruptcy case. Steer clear of these to avoid complications:

1. Luxury Purchases

Avoid spending on non-essential or extravagant items, such as:

• Vacations or travel
• High-end electronics (e.g., a new TV or gaming console)
• Designer clothing or jewelry

Why It’s Risky: These purchases can be seen as an attempt to dissipate assets, potentially leading to objections from the trustee or even a denial of discharge in extreme cases.

2. Paying Off Friends or Family

Repaying loans to relatives or close friends right before filing is a red flag.

• Example: Giving $5,000 to your cousin to “settle” an informal loan.

Why It’s Risky: The trustee may view this as hiding assets and could demand the money be returned to the bankruptcy estate.

3. Large Cash Withdrawals or Transfers

Taking out cash or moving your refund to another account (or someone else’s) can look suspicious.

• Example: Depositing your refund into a child’s account to “keep it safe.”

Why It’s Risky: This could be interpreted as fraud, leading to serious consequences like a dismissed case.

4. Gambling or Speculative Investments

Spending your refund on risky ventures, like gambling, cryptocurrency, or stocks, is a bad idea.

• Why It’s Risky: These actions suggest you’re trying to dispose of the refund rather than using it responsibly.

Chapter 7 vs. Chapter 13: How It Affects Your Refund

The type of bankruptcy you file impacts how your tax refund is handled:

• Chapter 7 Bankruptcy:
  • Your tax refund is considered an asset. If you receive it before filing, spending it improperly could lead to issues.
  • Some states allow exemptions to protect part or all of your refund (e.g., earned income credit for a child, additional child  tax credit, wildcard exemptions). Check with your attorney to see what applies in your state.
  • Timing matters: If you file late in the year or early in the year the tax refund you have earned up to that point but have not received will be claimable by the trustee.
• Chapter 13 Bankruptcy:
  • Your refund may need to be included in your repayment plan to pay creditors.
  • Courts may require you to turn over refunds during the plan (3-5 years) unless you budget them for necessities.
  • Spending the refund before filing is less scrutinized, but you still need to justify it as reasonable.

Pro Tip: Discuss your refund with your attorney to see if exemptions or timing strategies can protect it.

Timing Your Bankruptcy Filing

When you file bankruptcy relative to receiving your tax refund can make a big difference:

• Before Receiving Your Refund: If you haven’t received your refund yet, it can be considered part of your estate. If, for example, you file bankruptcy on November 1, the tax refund you earned from January 1 to October 31 can be considered part of the bankruptcy estate.
• After Spending Your Refund: If you’ve already spent the refund, be prepared to show it went to legitimate expenses. Courts typically look back 90 days to 1 year for questionable transactions.

Best Practice: Keep detailed records (receipts, bank statements) of how you spent the refund, and avoid filing immediately after large purchases to reduce suspicion.

Practical Steps to Protect Your Refund

1. Consult a Bankruptcy Attorney: Before spending your refund, get personalized advice to ensure compliance with local laws.
2. Document Everything: Save receipts and bank statements to prove your spending was reasonable if questioned.
3. Use Exemptions: Ask your attorney about state or federal exemptions that might protect your refund from creditors.
4. Budget Wisely: Incorporate the refund into your normal budget rather than treating it as “extra” money.
5. Avoid Sudden Changes: Don’t alter your spending habits drastically before filing, as consistency looks better to the court.

Conclusion: Spend Smart, File Confidently

Your tax refund can be a valuable resource, but spending it wisely before filing bankruptcy is critical to a smooth case. Stick to necessary expenses like rent, utilities, medical bills, or legal fees, and avoid luxury purchases or payments to friends and family. By planning ahead and consulting a bankruptcy attorney, you can use your refund responsibly without risking your fresh financial start.

Ready to file bankruptcy and protect your assets? Contact our experienced bankruptcy attorneys at LONG & LONG today at  303-832-2655 for a free consultation. We’ll guide you through every step to ensure your tax refund and finances are handled correctly.

How Chapter 7 Bankruptcy Can Impact Your Tax Return

Understanding Bankruptcy and Divorce

Bankruptcy and divorce are two separate legal processes, but they often intersect when a marriage ends amid financial strain. Bankruptcy can help eliminate or reorganize debts, while divorce divides assets and liabilities between spouses. The timing of these events can significantly affect your financial outcome, so it’s critical to weigh your options carefully.

There are two primary types of personal bankruptcy to consider:

• Chapter 7 Bankruptcy: A liquidation process that wipes out most unsecured debts (e.g., credit card debt, medical bills) but may require selling non-exempt assets.
• Chapter 13 Bankruptcy: A repayment plan that allows you to restructure debts over 3-5 years while keeping your assets.

Each type interacts differently with divorce, so let’s explore the timing question step by step.

Filing Bankruptcy Before Divorce

Filing for bankruptcy before finalizing your divorce can streamline the process, especially if you and your spouse are on amicable terms and share significant debt. Here’s why this might be the right choice:

Pros:

1. Joint Filing Option: If you’re still married, you and your spouse can file a joint bankruptcy petition. This can save time, reduce legal fees, and address all marital debts in one case.
2. Simplified Debt Division: Bankruptcy can discharge shared debts (like credit cards or personal loans) before the divorce, leaving fewer financial loose ends to split in court.
3. Lower Costs: Handling bankruptcy first consolidates legal efforts, potentially reducing the overall expense of two separate proceedings.
4. Protects Divorce Negotiations: Clearing debts beforehand can prevent disputes over who’s responsible for what during the divorce.

Cons:

1. Delays Divorce Proceedings: Bankruptcy triggers an “automatic stay,” halting most legal actions, including your divorce, until the bankruptcy case is resolved.
2. Income Complications: If you file Chapter 7 jointly, both spouses’ incomes are considered. A higher combined income might disqualify you from Chapter 7, pushing you toward Chapter 13 instead.
3. Asset Risks: In Chapter 7, non-exempt assets could be liquidated, complicating property division in the divorce.

Best For:

• Couples with significant joint debt who can cooperate.
• Situations where both spouses want a clean financial slate before parting ways.

Filing Bankruptcy After Divorce

Waiting until after your divorce is finalized to file bankruptcy might make sense if your financial situation is tied up in the divorce settlement or if you and your spouse can’t agree on a joint filing. Here’s what to consider:

Pros:

1. Individual Control: Post-divorce, you file bankruptcy based solely on your income and assets, giving you more control over the process.
2. Divorce Debt Clarity: Divorce agreements often assign specific debts to each spouse. Filing afterward lets you address only your portion of the liability.
3. No Divorce Delay: Your divorce can proceed without interruption from an automatic stay, which might be critical if tensions are high.
4. Protects Settlement Assets: Bankruptcy exemptions can shield assets you receive in the divorce, like a home or car, if timed correctly.

Cons:

1. Higher Costs: Separate bankruptcy filings for each spouse can double legal fees compared to a joint filing before divorce.
2. Lingering Joint Debt: If the divorce doesn’t fully resolve shared debts, you might still be liable for your ex-spouse’s obligations unless discharged in bankruptcy.
3. Credit Impact Timing: Divorce can already hurt your credit; adding bankruptcy afterward might prolong your financial recovery.

Best For:

• Individuals with minimal joint debt or significant personal debt post-divorce.
• Cases where divorce negotiations are contentious or complex.

Key Factors to Consider

To decide whether to file bankruptcy before or after divorce, evaluate these critical elements:

1. Type of Debt: Are your debts joint (e.g., a mortgage or co-signed loans) or individual? Joint debts are easier to handle in a pre-divorce bankruptcy.
2. Cooperation Level: Can you and your spouse work together on a joint filing? If not, waiting until after the divorce might be less stressful.
3. Income and Eligibility: Your combined income before divorce might affect Chapter 7 eligibility. Post-divorce, your individual income could qualify you more easily.
4. Assets at Stake: Consider how bankruptcy might impact property division. Filing after divorce lets you protect assets awarded in the settlement.
5. Timing and Stress: Are you in a rush to finalize the divorce? Bankruptcy first could delay things, while bankruptcy after might extend your financial burden.

How Bankruptcy and Divorce Interact

• Automatic Stay: Filing bankruptcy halts divorce proceedings temporarily, which can be a pro or con depending on your goals.
• Property Division: Divorce courts divide marital property, but bankruptcy courts determine what’s exempt from liquidation. Timing these processes can protect or jeopardize assets.
• Alimony and Support: Bankruptcy doesn’t discharge domestic support obligations (e.g., alimony or child support), so these remain intact regardless of when you file.
• Chapter 13 bankruptcy versus Chapter 7 bankruptcy: Chapter 13 allows discharge of property se

Practical Steps to Decide

1. Consult Professionals: Speak with a bankruptcy attorney and a divorce lawyer to assess your situation. Many offer free initial consultations.
2. Review Finances: List all debts, assets, and income—both joint and individual—to see how each option affects you.
3. Plan Your Goals: Are you prioritizing speed, cost savings, or asset protection? Your priorities will guide your choice.
4. Consider Mediation: If filing jointly before divorce, mediation can help you and your spouse align on financial decisions.

Conclusion: What’s Right for You?

There’s no one-size-fits-all answer to whether you should file bankruptcy before or after divorce. Filing before works best for couples with shared debt and a cooperative mindset, offering a fresh start with lower costs. Filing after suits those with individual debt or complex divorce terms, giving you flexibility post-settlement.

Ultimately, your decision hinges on your financial snapshot and personal circumstances. By consulting experts and weighing the pros and cons, you can choose the path that minimizes stress and maximizes relief. Ready to take the next step? Call or text  LONG & LONG now at 303-832-2655, or through this website,  and ask to  schedule your free consultation to explore your options and secure your financial future. With over  35 years of experience and a former Trustee for the U. S. Bankruptcy Court, Attorney Martin E. Long is the go-to bankruptcy attorney in Colorado. Here’s the clickable link:

Are Divorce Debts Discharged in Bankruptcy?

CHAPTER 11

A Bankruptcy Court sitting in a Chapter 11 case has very broad powers to allow a Chapter 11 business debtor to re-negotiate with utility companies, supply contractors and unions or other labor representatives as well many, many other individuals or entities. Chapter 11 business cases are when you want to keep their business going and you have has a realistic chance to do so, if certain costs are renegotiated and other legal objections are met. It is important to note, however, that Chapter 11 cases are complicated and expensive. It is critical that before filing for relief under Chapter 11 of the Bankruptcy Code you have a detailed discussion with your experienced bankruptcy attorney regarding your current state of affairs as well as your realistic goals for your small business in the near, intermediate and long term future. These discussions will inform your attorney as to whether it is better to negotiate a pre-packaged Chapter 11 case and then file or whether it is better to file for relief under Chapter 11 and file for various protective Order on the first day at the inception of your case.

CHAPTER 13

            Yes, Chapter 13 has a place in small business bankruptcy discussions. If you are your businesses only employee and there are numerous guarantees that you signed incurring liability in your personal capacity as well as your capacity as the owner of your small business, perhaps even using personal property or your home as collateral, you may need to file for Chapter 13 bankruptcy. If you file for relief under Chapter 13 of the bankruptcy you must be an individual, and you file as an individual, doing business as, or who owns the specific company.

CHAPTER 7

            Chapter 7 of the Bankruptcy Code allows for a business to file for relief under Chapter seven to liquidate the business. If your business does not have significant name or brand recognition and if there is little in the way of actual assets that the business owns, such as tools, a fleet of cars, many computers, et cetera, it may be worth your while to liquidate the company and officially unwind your business with the state. If you work as an educated professional your value lay in your education and experience. Plumbers, welders, electricians and all manner of skill craftsman as well as lawyers, accountants and architects certainly fall within the ambit of this discussion. You can always reopen a new business doing the same thing you are skilled at.

          The law firm of Long & Long have decades of combined experience in bankruptcy and has the know how to represent any type of client, whether debtor or creditor, in any type of bankruptcy proceeding, including Chapter 11 and Chapter 7. Long & Long can be reached at (303) 832-2655.     

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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.

The first thing you must do when a debt collector calls is to inquire if indeed they are the creditor themselves–such as the actual doctor’s office or hospital business office itself. They may be from a third party collection agency.

Next it is important to determine if they are trying to collect on a real debt or fake debt. As of late, this has become a serious problem. Although there are also many legally and ethically appropriate debt collection firms, many debt collection firms are notorious for operating outside the strictures of the FDCPA. Even with the many protections provided by the FDCPA, some debt collection efforts become too much even for the most resilient debtor.

TAKE STOCK OF YOUR DEBT

            After determining whether your debt is legitimate, you should determine your overall debt. You can obtain a free credit report, and it pays to make sure that all of your information listed is correct. It is best to check your credit report at least once a year to make sure you are not the victim of identity theft.

If after review you find that you cannot realistically pay down your debt to a level you are comfortable with, you should contact a consumer rights attorney who can explain your options; this may include evaluating bankruptcy options. 

FILING FOR BANKRUPTCY

Bankruptcy is a federal law that provides the ultimate trump card for almost all debt collection activity. A Chapter 7 allows debtors to get rid of their dischargeable debt without further payments. A Chapter 13 allows debtors to eliminate dischargeable debt while paying  nondischargeable debt such as taxes, child support, student loans. As such, there are extremely few situations where a debt collector would not be stopped in their tracks if the debtor filed for bankruptcy.

Experienced bankruptcy attorneys understand the larger legal structure of debtor-creditor rights and responsibilities. They know what creditors are able to sue for, how to go about defending those claims and ensure that their clients’ rights are scrupulously protected. They understand whether a debt is unenforceable due to statute of limitations or if the creditor would not be able to obtain jurisdiction over you. Once you retain an attorney, they will stand between you and the debt collectors. Depending on the action plan that you and your attorney decide upon, your attorney may try to negotiate the debt down to a reasonable level, work out a payment plan or deal with the creditor through a bankruptcy proceeding.

GET LEGAL HELP

            If debt collectors are harassing you, it pays to know your rights and to have an aggressive, experienced advocate that knows how to deal with them both legally and practically. The attorneys of Long & Long have decades of experience in thousands of bankruptcy cases. Few law firms can match the dedication, professionalism and experience of Long & Long. In fact, Attorney Martin Long is a former Trustee for the U. S. Bankruptcy Court. You can contact us by calling (303) 832-2655. 

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