Bankruptcy ✦ Colorado
Stop the Collection Calls. Keep What Colorado Lets You Keep.
Chapter 7 wipes out debt in about four months. Chapter 13 stops a foreclosure and lets you catch up. Subchapter V keeps a small business alive. North Star Law Firm handles all of them in the U.S. Bankruptcy Court for the District of Colorado for a flat fee, with an attorney-CPA who can tell you before you file whether your tax debt goes with them.
Overview
What is different about bankruptcy in Colorado?
The Bankruptcy Code is federal, but three things about a Colorado case are local. First, Colorado is an opt-out state under C.R.S. § 13-54-107, so Colorado’s own exemption list decides what you keep, and it is a generous one: $250,000 of home equity, up to two vehicles, $60,000 of business tools, and every dollar in a retirement account. Second, Colorado creditors can garnish wages once they have a judgment, so the automatic stay does real work here. Third, every case in the state is heard by one court in Denver, with 341 meetings by Zoom, which is why we can represent clients anywhere in Colorado without anyone traveling.
- Free means-test and Colorado exemption analysis before you decide
- Automatic stay: garnishments, levies, lawsuits, and Public Trustee foreclosure sales stop at filing (11 U.S.C. § 362)
- Flat-fee, start-to-finish representation including the Zoom 341 meeting
- Tax discharge analysis by an attorney-CPA from your actual IRS transcripts
- Colorado exemptions applied and planned, since the federal list is not available here
- Honest advice when bankruptcy is not the right tool
- Preference and clawback defense for creditors (11 U.S.C. § 547)
Your Options
Bankruptcy is a toolbox. Pick the right tool.
The chapter you file decides what happens to your house, your business, and your tax debt. These are the tools we use in the District of Colorado.
Chapter 7
The fresh start. Most unsecured debt discharged in about four months, and most Colorado filers keep everything they own.
Chapter 7 in Colorado →Chapter 13
The catch-up plan. Stop a Public Trustee foreclosure or a repossession and cure what you owe over three to five years.
Chapter 13 in Colorado →Chapter 11
The reorganization. Businesses and high-debt individuals restructure under court protection while operations continue.
Chapter 11 in Colorado →Subchapter V
The small business track. Keep ownership, confirm a plan in months, and restructure business, SBA, and tax debt at small business scale.
Subchapter V in Colorado →Discharging Tax Debt
The three dates that decide whether the IRS gets paid or gets nothing, and the Tenth Circuit rule on late returns every Colorado filer needs to know.
Tax debt in bankruptcy →SBA Loans & Business Debt
EIDL, 7(a), and PPP defaults, personal guarantees, and Treasury collection, and where bankruptcy fits against a workout or an offer in compromise.
SBA and business debt →When does collection actually stop?
The moment your petition is filed. The automatic stay of 11 U.S.C. § 362 takes effect immediately and stops wage garnishments, bank levies, repossessions, lawsuits, collection calls, and a scheduled Public Trustee foreclosure sale, including the IRS and the Colorado Department of Revenue. For many clients the stay is the first quiet they have had in years, and it holds while the case proceeds.
Can bankruptcy really wipe out tax debt?
Yes, when the timing rules are met. Income taxes are generally dischargeable if the return was due more than three years before filing, the return was actually filed more than two years before filing, and the tax was assessed more than 240 days before filing, with no fraud or willful evasion (11 U.S.C. §§ 507(a)(8), 523(a)(1)). Colorado sits in the Tenth Circuit, which held in In re Mallo that a return filed late generally is not a return for discharge purposes, so a taxpayer with late filings needs a different plan than one who filed on time and simply could not pay. Those dates come from your IRS account transcripts, and reading transcripts is CPA work. We pull them, compute the earliest safe filing date, and time the case so the maximum amount of tax is discharged.
What does the process look like?
After the free analysis, you complete a short credit counseling course, we prepare the petition and schedules, and we file electronically with the District of Colorado. About a month later you attend the trustee’s 341 meeting by Zoom, which we attend with you. After a second short course, a Chapter 7 discharge order arrives, usually within 90 to 120 days of filing. Chapter 13 and Subchapter V cases move to a confirmation hearing in Denver instead. Our engagement is flat-fee and covers the whole process.
The Tax-Discharge Tests
Can your tax debt be wiped out? Four tests decide.
Income tax is dischargeable in bankruptcy only when every timing test is met on the day you file. The dates come from your IRS account transcripts, and filing even a few weeks early can leave a fully payable tax alive.
| Test | What it requires | Authority |
|---|---|---|
| 3-year rule | The return was due (including extensions) more than 3 years before the bankruptcy filing | 11 U.S.C. § 507(a)(8)(A)(i) |
| 2-year rule | You actually filed the return more than 2 years before the bankruptcy filing | 11 U.S.C. § 523(a)(1)(B) |
| 240-day rule | The IRS assessed the tax more than 240 days before the bankruptcy filing | 11 U.S.C. § 507(a)(8)(A)(ii) |
| No fraud or evasion | No fraudulent return and no willful attempt to evade the tax | 11 U.S.C. § 523(a)(1)(C) |
Prior bankruptcies, offers in compromise, and collection due process hearings pause these clocks, so the safe filing date is a computation, not a guess. As an attorney-CPA practice, we pull the transcripts, run the tolling math, and time the case for maximum discharge. The tax debt page walks through the rules in detail.
Filing to Fresh Start
About 100 days, start to finish.
- Day 0: Petition filed in Denver; the automatic stay stops garnishments, levies, lawsuits, and foreclosure sales immediately
- ~Day 30: Trustee’s 341 meeting by Zoom, usually ten minutes, which we attend with you
- ~Day 60: Creditor objection window runs while you finish a short online course
- ~Day 100: Discharge order: eligible debt is gone, permanently
Questions & Answers
Bankruptcy questions Coloradans ask us
Will I lose my house or car in a Colorado Chapter 7?
Most people don’t. Colorado’s homestead exemption protects $250,000 of home equity ($350,000 if you, your spouse, or a dependent is 60 or older or disabled) under C.R.S. § 38-41-201, and the vehicle exemption protects $15,000 of equity in up to two cars ($25,000 for elderly or disabled filers). Retirement accounts are fully protected. Colorado is an opt-out state, so these are the exemptions that apply; the federal list under 11 U.S.C. § 522(d) is not available here. Running your assets against that list is the first thing we do.
Where is my case filed, and do I have to go to court?
Every Colorado case is filed in the United States Bankruptcy Court for the District of Colorado, which sits in Denver and serves the entire state, from Fort Collins to Pueblo to Grand Junction. The trustee’s 341 meeting is held by Zoom in Colorado, so most Chapter 7 clients never set foot in a courtroom. Chapter 13 confirmation hearings are on the court’s docket in Denver but are routinely handled by counsel.
Can a creditor garnish my wages in Colorado?
Yes. Unlike Texas, Colorado lets a judgment creditor garnish up to 20 percent of your disposable earnings, or the amount above 40 times the minimum wage, whichever is less (C.R.S. § 13-54-104). The IRS can levy wages with no judgment at all. The automatic stay under 11 U.S.C. § 362 stops both the moment your petition is filed, and for many clients that is the fastest way to get a full paycheck back.
Can bankruptcy wipe out my tax debt?
Often, yes. Income taxes are dischargeable when the return was due more than three years before filing, was actually filed more than two years before filing, and was assessed more than 240 days before filing, with no fraud or evasion. The dates come from your IRS transcripts, and the Tenth Circuit adds a wrinkle for Colorado filers: a late-filed return generally does not count as a return at all for discharge purposes. That makes the analysis unforgiving, and it is exactly the work an attorney-CPA is built for.
How much does it cost?
Chapter 7 and Chapter 13 cases are quoted as a flat fee in writing before you commit, and payment plans are available. Court filing fees are set by the court. Business reorganizations are scoped individually. The consultation is free either way.
Find out what a fresh start looks like, for free.
A confidential means-test, Colorado exemption, and tax-discharge analysis with an attorney-CPA. Flat fee quoted in writing if you decide to file.