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The new bankruptcy legislation applies income limitations for individuals and couples filing for Chapter 7 bankruptcy. As a general rule, if you make less than the median income for the state of Colorado, you pass the income test

In a Chapter 7, if you want to keep your home or car, you must be current on your mortgage and car payments. If your equity in the property is fully exempt, than you may keep your home or car so long as you continue to make the monthly payments required. For example, the exemption for home equity is $45,000. If you own a home worth $150,000 and you owe $110,000, you have $40,000 of equity in your property. In this case, you could file a Chapter 7 and keep your home as long as you are current on your payments and continue to make them on time. In reality, equity is measured after accounting for the cost of sale (e.g., Realtors and fix up costs). So even if you could sell this house for $160,000, the equity will still be exempt ($160,000- about $16,000 in costs of sale = $144,000. After you pay the mortgage off, you would have only $34,000, which is exempt.)

You may not be eligible to file a petition if, within the preceding 180 days, you voluntarily dismissed a bankruptcy case or failed to appear in a bankruptcy case. No Chapter 7 discharge will be granted where a previous discharge was granted within the past 6 years.

You are required by law to list all debts that you have when you file for bankruptcy. However, you may reaffirm a debt if you wish, and after you have received counsel from your attorney. This means that you agree to pay it back despite the fact that you have filed bankruptcy, and we generally do not recommend it.

Taxes are rarely dischargeable. If the taxes are trust fund taxes, like 941 taxes or sales taxes, they simply are not dischargeable. If the taxes are secured by real estate, they are not dischargeable. For unsecured income taxes, a whole series of events must take place in order for the taxes to be dischargeable. This area of bankruptcy law is complex, and you must meet with a highly qualified bankruptcy attorney to make this determination.