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The First Steps to Take When Considering Bankruptcy in Colorado

Facing financial hardship can be overwhelming, leaving many feeling as though they have no options left.

Bankruptcy offers a legal pathway to manage or discharge debts and start anew.

At Berken & Cloyes, we understand the intricacies of this process, especially within Colorado.

If you’re considering bankruptcy, it’s crucial to take informed, deliberate steps.

Understand Your Bankruptcy Options

Assess the Type of Bankruptcy to File
There are several types of bankruptcy, but the most common for individuals are Chapter 7 and Chapter 13. Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, involves the sale of non-exempt assets to pay off creditors.

It’s suitable for those with limited income who cannot pay back their debts. Chapter 13, on the other hand, is a reorganization bankruptcy, ideal for individuals with a regular income who can pay back part of their debts through a structured repayment plan.

Evaluate Your Financial Situation
Before filing for bankruptcy, take a comprehensive look at your financial situation. List all assets, debts, income, and expenses. This evaluation will not only help determine which type of bankruptcy is most suitable but also prepare you for the bankruptcy process, where detailed financial information is required.

Consult a Bankruptcy Attorney

Seek Professional Advice
Bankruptcy law is complex and varies by state. Consulting with a bankruptcy attorney who understands Colorado’s specific laws and exemptions is crucial. An attorney can provide guidance tailored to your individual circumstances, helping you decide if bankruptcy is the best option, and if so, what type of bankruptcy to pursue.

Understand Colorado Bankruptcy Exemptions
Colorado has specific exemptions that determine what assets you can keep after filing for Chapter 7 bankruptcy or setting up a repayment plan in Chapter 13. For example, there are exemptions for your home, vehicle, retirement accounts, and personal belongings. Knowledge of these exemptions is vital, as it affects the assets you can protect.

Gather Documentation

Compile Necessary Financial Documents
You will need detailed documentation of your financial status for your bankruptcy filing. This includes tax returns, pay stubs, mortgage statements, car loan documents, credit card bills, and any other documentation related to your financial obligations. Organizing these documents early will help streamline the process.

Credit Counseling
Under Colorado law, anyone filing for bankruptcy must complete credit counseling from an approved agency within 180 days before filing. This session aims to help you understand your financial situation, evaluate alternatives to bankruptcy, and complete a personal budget plan.

Consider the Impacts

Think About the Consequences
While bankruptcy can offer a fresh start, it also comes with significant consequences. It can impact your credit score, affecting your ability to obtain loans, mortgages, or even employment in some industries for several years. Discuss these impacts thoroughly with your attorney to ensure you’re prepared for the repercussions.

Plan for the Future
Bankruptcy isn’t just about clearing past debts—it’s also a chance to rebuild financially. Consider how you will avoid future debts and improve your financial habits post-bankruptcy. Financial planning and budget management are crucial strategies to implement.

Deciding to file for bankruptcy is a significant decision that requires careful consideration and preparation.

By understanding the types of bankruptcy, consulting with a knowledgeable attorney, organizing your financial documents, and considering the long-term impacts, you can make an informed decision that best suits your situation.

At Berken & Cloyes, we are dedicated to guiding our clients through this complex process, ensuring they receive the support they need to achieve a financially stable future.

If you are considering filing for bankruptcy in Denver, CO call Berken Cloyes, PC today at (303) 623-4357 to schedule an appointment.