• Colorado has specific laws regarding bankruptcy.Legal Law Justice image by Stacey Alexander from Fotolia.com
  
  Filing bankruptcy in Colorado is regulated by federal law. In order to file for bankruptcy in Colorado, a debtor should be aware of the complexity of the process. Although a debtor is free to file on his own, it is highly recommended to seek the assistance of a bankruptcy attorney to protect the debtor from additional costs or a potential misfiling.
  
  

Types of Bankruptcy in Colorado

• There are four types of bankruptcy that individuals and consumers may file. Each type is called a "Chapter," from the Chapters of the Bankruptcy Code created by the federal government. Chapter 7 is a liquidation bankruptcy, most commonly used by individuals and families. This type of bankruptcy allows the debtor to discharge most, if not all, of his debts. Chapter 9 bankruptcy is a special filing, generally used by governments and other organizations, such as school or utility districts. Chapter 12 is typically used for family farms or fishing businesses. The debt in this Chapter is not discharged but organized in a plan where the debtor pays the creditors over an extended period of time. Chapter 11 is mostly utilized by businesses and is a reorganization for entities with large amounts of debt. Creditors vote on whether the plan put forth by the debtor or debtor's attorney is acceptable to repay them. Finally, a Chapter 13 bankruptcy is used for Colorado residents whose debt does not exceed a total of $1,347,550 as of 2010. This filing is also a reorganization set up by the debtor or his attorney and approved by the court. The plan must include all debts to be paid within a three- to five-year period.
  
  

Colorado Bankruptcy Exemptions

• There are rules in the Bankruptcy Code where each state may specify what debts or property can be retained by the debtor. No matter what type of bankruptcy the debtor decides to file, however, he is allowed to keep certain property and assets, such as a house, vehicle, jewelry and a certain amount of cash. In Colorado, debtors are allowed to keep jewelry valued up to $2,000, household goods up to $3,000 and vehicles up to $5,000. If a debtor's household has assets more than the exemption amounts are allowed, he may be subject to further scrutiny from the bankruptcy court.
  
  

Qualifications to File Bankruptcy in Colorado

• A means test determines whether a debtor qualifies for bankruptcy. Means testing is used by the court to verify that no individual or business is committing bankruptcy fraud. The means test is applicable to all bankruptcy Chapters and is determined by reviewing the last six months of income and expenses. If the debtor's combined household income falls below the state median ($57,184 as of 2008), he could potentially qualify.