Chapter 13 Bankruptcy: Costs, Repayment Plan, Eligibility

Colorado Debtors who are facing foreclosure or repossession of their vehicle have two bankruptcy relief options, namely chapter 7 and chapter 13. Denver bankruptcy courts have also had cases where the debtor filed for chapter 13 then requested a conversion to chapter 7.

In Denver, chapter 13 bankruptcy could be the suitable solution for debtors who have a steady income and would only need time to pay off certain debts. The debtor needs to make an assessment whether he will be able to fulfill the bankruptcy requirements. For the most part in Colorado, chapter 13 bankruptcy has become a popular alternative because debtors could keep their properties as long as they abide to the repayment plan. This is the factor that distinguishes chapter 7 from chapter 13. Denver has a significant increase in chapter 13 filings for the past two years because it seems more attractive to homeowners.

Fee

If a debtor decides to file for chapter 13, Denver courts ordinarily require the payment of a fee. In entire Colorado, chapter 13 bankruptcy filing fee is $274. Furthermore, Denver chapter 13 bankruptcy filing requires prior counseling by a credit counseling agency. The fee for counseling amounts to about 100 dollars in total but we know some free sources. In many cases being heard by the courts in Denver, chapter 13 bankruptcy filings are submitted by bankruptcy lawyers. The Cimino Benham law firm is known to be one of the best bankruptcy law firms in Colorado. In Colorado, chapter 13 bankruptcy lawyers who have extensive experience in this area of the law are very rare and Cimino Benham has gained the reputation of being reliable and affordable compared to other firms. Like many legal counsels in Colorado, chapter 13 lawyers do not have to be paid at once. He could pay a certain retainer fee and the rest over the course of the plan.

Repayment Plan

The first thing that a debtor needs to think about is the repayment plan. If the filing is done in Colorado, chapter 13 repayment plans would have to be submitted to a bankruptcy judge who will then make an assessment whether or not the debtor would be able to fulfill the plan. In sum, the debtor needs to convince the bankruptcy court that he will have sufficient income to pay off current debts while making payments for back taxes, back child support or mortgage and secured debt arrearages. In Colorado, chapter 13 repayment plans, like in any other state, needs to show that the debtor can pay the total amount owed to unsecured debtors which they would have received if the debtor filed for chapter 7.

Threshold

Prior to filing for chapter 13, Denver residents need to look at the median income in Colorado as this amount will determine whether or not the debtor would be eligible to file for other bankruptcy reliefs, such as chapter 7.

As mentioned, legal advice of an experienced bankruptcy lawyer is inevitable in some cases regardless of whether the debtor files for chapter 7 or chapter 13. Denver residents should consult a law firm in the area which has extensive experience with the creation of a feasible repayment plan.

Strip

Unlike chapter 7, with a 13 filing, you can strip off or wipe out a second mortgage if your home is worth less than the first loan. So, if your home is worth $250,000, but you owe $260,000 on your first mortgage, we can show you how to wipe out or eliminate your second, third or other junior mortgage AND home equity loan. So, even though you might qualify for a 7, you might be better off filing chapter 13 to take advantage of the strip off provisions of the bankruptcy code.