Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is typically considered as an option of last resort, because while it can stave off financial disaster, it has some substantial long-term consequences warranting careful consideration of the costs and benefits. Bankruptcy is a creation of federal law, and goes through federal courts. Therefore, the procedure governing bankruptcy in Colorado will be roughly the same as it is anywhere else in the U.S. But individual courts have different rules for what property is exempt, so you should consult a local Sheridan, Colorado before you file.

Chapter 7 Bankruptcy in Sheridan, Colorado

There are 2 typical types of bankruptcy in Sheridan, Colorado. They are known as Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 involves liquidation of some of a debtor's assets. It requires that a certain percentage of the debtor's property to be sold to pay off as much debt as possible. The majority of property that most people own, however, is exempt. This typically includes homes, vehicles, retirement accounts, and others. These are not available to creditors.

Once the non-exempt property is sold, the rest of the dischargeable debt is absolved. Some types of debt, however, is non-dischargeable, including student loans, criminal fines, and others. If most of your debt in Sheridan, Colorado is not dischargeable, Chapter 7 may not be the best option.

Chapter 13 Bankruptcy in Sheridan, Colorado

In Sheridan, Colorado, Chapter 13 is substantially different from Chapter 7. Chapter 13 may or may not be the best choice for you; this depends on the facts of your specific situation. Chapter 13 bankruptcy does not absolve debt, it restructures it. This involves a court coming up with an adjusted repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original arrangements that created the debt in the first place. This creates a new payment structure, typically involving a single monthly payment, that the debtor should find manageable.

Which Type of Consumer Bankruptcy Should I File in Sheridan, Colorado

The answer to this question depends heavily on your distinct situation. If you have enough steady income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 might be a good option. If you don't have much steady income, and most of your property is exempt, Chapter 7 might be better.

In any case, you should talk with a local Sheridan, Colorado bankruptcy attorney. Your attorney can advise you of your options and inform you of their likely result. This will make it much easier for your to make an informed choice.