Colorado law protects many of your assets when you file for bankruptcy. This is done using asset protection laws called exemptions. These laws exclude your assets from being taken by the Bankruptcy Trustee or creditors and help you maintain a stable life and maximize your fresh start.
How to Use Colorado’s Bankruptcy Exemptions
Whether you plan to file chapter 7 or chapter 13 bankruptcy, in order to protect your assets, the Colorado Bankruptcy Court requires that you list and match your assets to the appropriate exemption. This is done in your bankruptcy schedules filed with the Court. An experienced bankruptcy attorney can handle this for you and will know how to properly list your assets so they are protected.
Valuing Your Assets for Exemption Purposes
Rules for valuing assets can be complex. For example, the value of your assets can be calculated in different ways, including garage or quick sale, auction, or replacement value.
In addition to your assets being valued in different ways, there are other factors involved in a proper assessment. In certain circumstance it is appropriate to take the cost of selling the asset off of the value.
For example, if the Bankruptcy Trustee was going to sell an asset you owned and distribute it to creditors, then the Trustee may need to hire an auctioneer. The auctioneer may cost as much as 10-15% of the value of the asset. In this case the asset may be listed in your bankruptcy minus the cost of sale.
An experienced Colorado bankruptcy attorney can save you thousands of dollars by properly matching your assets to exemptions and listing their value appropriately. However, what happens if you have assets that cannot be protected?
Assets that are not protected by law can be handled in many different ways. For example, if you have an unprotected asset and you desire to keep, then your bankruptcy attorney can negotiate a deal with the Trustee in exchange for keeping the asset.
In the alternative your attorney can recommend another type of bankruptcy, such as Chapter 13 bankruptcy, which may allow you to keep the asset. Different types of bankruptcy have different rules on keeping assets.
List of Exemptions
There are numerous exemptions statutes to protect your interest and they can be found throughout the Colorado Revised Statutes and the Federal Statutes. Some of the broader exemptions, such as household goods cover a lot of the general property, including personal electronics, furniture, and appliances.
IMPORTANT NOTE: Exemptions protect your equity in an asset. To determine whether your property is protected you need to determine the value as discussed above and take away any loans on the property. In addition, many exemptions are per person, so a married couple may be able to double the amount of the exemption.
Here is a list of some of the more common exemptions.
- C.R.S. 38-41-201. Homestead Exemption. (a) The sum of two hundred fifty thousand dollars if the homestead is occupied as a home by an owner thereof or an owner’s family; or (b) The sum of three hundred fifty thousand dollars if the homestead is occupied as a home by an elderly or disabled owner, an elderly or disabled spouse of an owner, or an elderly or disabled dependent of an owner.
- C.R.S. 13-54-102(1)(a). The necessary wearing apparel of the debtor and each dependent to the extent of two thousand dollars in value;
- C.R.S. 13-54-102(1)(b). Watches, jewelry, and articles of adornment of the debtor and each dependent to the extent of two thousand five hundred dollars in value;
- C.R.S. 13-54-102(1)(c). The library, family pictures, and school books of the debtor and the debtor’s dependents to the extent of two thousand dollars in value; except that this paragraph (c) shall not apply to any such property constituting all or part of the stock in trade of the debtor;
- C.R.S. 13-54-102(1)(d). Burial sites, including spaces in mausoleums, to the extent of one site or space for the debtor and each dependent;
- C.R.S. 13-54-102(1)(e). The household goods owned and used by the debtor or the debtor’s dependents to the extent of six thousand dollars in value;
- C.R.S. 13-54-102(1)(f). Provisions and fuel on hand for the use or consumption of the debtor or the debtor’s dependents to the extent of six hundred dollars in value;
- C.R.S. 13-54-102(1)(i). The stock in trade, supplies, fixtures, maps, machines, tools, electronics, equipment, books, and business materials of a debtor used and kept for the purpose of carrying on the debtor’s primary gainful occupation in the aggregate value of sixty thousand dollars or used and kept for any other gainful occupation in the aggregate value of twenty thousand dollars; except that exempt property described in this paragraph (i) may not also be claimed as exempt pursuant to paragraph (j) of this subsection (1);
- C.R.S. 13-54-102(1)(j)(I). One or more motor vehicles or bicycles kept and used by any debtor in the aggregate value of fifteen thousand five hundred dollars; or
- C.R.S. 13-54-102(1)(j)(II)(A). One or more motor vehicles kept and used by any elderly or disabled debtor, or by any debtor with an elderly or disabled spouse or dependent, in the aggregate value of twenty-five thousand five hundred dollars.
- C.R.S. 13-54-102(1)(x). Firearms and hunting and fishing equipment not to exceed one thousand dollars in value.
- And many other exemptions that may be used to protect your property including, but not limited to, military pensions, equipment, farming and ranching supplies, life insurance, annuities, health aids, retirement, support payments, and disability benefits.
Taking the Next Step
Are you ready to find out how bankruptcy may affect your assets and get an accurate and personalized bankruptcy review? Then the next step is to meet with a Colorado bankruptcy attorney at Cohen & Cohen to review your matter and protect your interests.
Our bankruptcy attorneys provide professional bankruptcy representation and have the knowledge to protect your assets from creditors and the Court.
Speak to the Colorado bankruptcy attorneys at Cohen & Cohen to see how our experience helping individuals and business owners file for bankruptcy can help you.
To schedule your initial consultation at our convenient central Denver location, call 303-933-4529.
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About the Author: Robertson Cohen
Rob Cohen is a Managing Partner of Cohen & Cohen, P.C., serving clients in Colorado and Wyoming. He’s a Chapter 7 Bankruptcy Panel Trustee, certified mediator, and has administered over 8,000 Chapter 7 bankruptcy estates.