Patrick O'Malley

Property Exempt And Not Exempt In A Colorado Bankruptcy

Bankruptcy does not mean losing everything. In fact, in many cases the filer will lose little or no property. Much depends on whether the property is ‘exempt’. In a Chapter 7 case, exempt property will not be sold. In a Chapter 11 or 13 case, the value of exempt property will not be counted against the filer when calculating the repayment plan.

Bankruptcy filers in Colorado have a limited number of useful and significant exemptions available through state law exemptions and apart from veteran’s benefits, some fairly esoteric federal exemptions. Some states, but not Colorado, allow filers to use either the state exemptions or federal bankruptcy code exemptions. So, if you’ve read it somewhere on the internet, that is true elsewhere, but not in Colorado.

For the sake of brevity, the following only discusses exemptions that are both common and also important. Even within these exemptions there are exceptions, requirements, and caveats which will make them more or less useful. For example, if a married couple is jointly filing, the exemptions are doubled. Also, a filer’s disability increases some of the exemptions. Finally, there are other exemptions not listed here, but those rarely come up. The value used is not the price you paid or you could sell it for, it is the price the trustee would be able to sell it for now, often referred to as the ‘garage-sale’ price.

Pensions and retirement accounts -

Pensions and retirement accounts are exempt in bankruptcy.

Residence, owned or rented -

$75,000 of equity in the primary residence is exempt. This is the only exemption that is not doubled in a joint filing. Rental security deposits are exempt.

Vehicles -

$7,500 of combined equity in all vehicles used for transport is exempt. Boats and other recreational-type vehicles are not exempt.

Income -

Public benefits, which are things like worker’s compensation benefits, unemployment benefits, child tax credits, and similar are fully exempt.

Non-public personal benefit-like payouts, which includes things like insurance payouts, litigation payouts, alimony, and child support are all exempt.

Wages are partially exempt; 80% of the paycheck’s post-withholdings income or $444 weekly is exempt, whichever is greater.

Personal effects and similar -

Clothing, personal adornments, household goods, and a personal library are exempt for between $2000 to $3000 of their respective aggregate values. Food and fuel is exempt to $600. Health aids and graves are fully exempt.

Professional items -

$30,000 of primary occupation and $10,000 of secondary occupation ‘tools’ are exempt. Tools is broadly interpreted, covering everything from a carpenter’s saw to an accountant’s computer. A professional’s library is exempt to $3000. An agricultural professional’s items are exempt to $50,000.

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