Bankruptcy can often either be good choice or the only choice after Americans experience catastrophic illness, extended unemployment, or unsuccessful business ventures. Many individuals believe that they will lose everything they own when they file bankruptcy. However, this is not the case.
If you find yourself in a truly challenging financial situation, an experienced attorney will be able to help identify which assets the court will allow you to keep if you ultimately choose to file for bankruptcy. Only when you have all the information will you be able to decide if bankruptcy is the best choice for your situation.
If you ultimately file for Colorado's Chapter 7 bankruptcy proceedings, these are a few of the assets you may be allowed to keep.
401(k) and other Employee Retirement Income Security Act (ERISA) accounts.
ERISA is the minimum standard for all retirement plans sponsored by employers. These plans can include 401(k), 403(b), profit sharing, stock plans, and employee sponsored IRAs. Monies in these plans are exempt under both federal and state rules. As long as there has been no impropriety, the amount you can protect by investing in these plans is not limited.
Traditional IRAs and Roth IRAs
Both types of investment products are exempt in bankruptcy - to a point. Currently, the limit set by Congress is $1.3 million combined. The limit is subject to cost of living and inflation adjustments, therefore it has increased each year since the limit was set.
In Colorado, you may generally keep real estate property, mobile or manufactured homes that you currently occupy. The base amount protected is up to $60k. That amount increases to $90k, if the home is occupied by a debtor or spouse who is over the age of 60 or disabled. Additional protections may be available.
There are certain conditions for this exemption. However, in Colorado as long as the child support payments are kept in a separate account from other sources of income, they may be exempt from debtors.
There are specified protections for each type of personal property. In most cases, Coloradans facing bankruptcy can keep at least a portion of these items;
- motor vehicles
- food and fuel
- burial plot
- household goods
- earned income tax credit
These are a few of the items you may be able to keep after filing bankruptcy in Colorado. However, this list may change and doesn't include all of the federal exemptions you may be entitled to. In order to best prepare for bankruptcy and fully understand your rights, you may benefit from seeking the assistance of an experienced bankruptcy attorney.