Bankruptcy ✦ Chapter 13
Keep the House. Catch Up on Your Terms.
Chapter 13 is a court-supervised repayment plan for people with regular income who need time: to stop a Public Trustee foreclosure, save a car, pay recent tax debt without penalties, or protect equity that Chapter 7 would put at risk. North Star Law Firm builds and confirms Chapter 13 plans throughout Colorado for a flat fee, with the numbers done by a CPA.
Overview
What does Chapter 13 do that Chapter 7 can’t?
Chapter 7 wipes out debt; Chapter 13 reorganizes it. You propose a plan under 11 U.S.C. § 1322 that pays creditors from your future income over three to five years, and the automatic stay protects you the entire time. Mortgage arrears get cured. Car loans get restructured. Recent tax debt gets paid over time without new penalties. Property that exceeds Colorado’s exemptions stays yours, because instead of surrendering it you pay its nonexempt value through the plan. At the end, the remaining eligible unsecured debt is discharged under 11 U.S.C. § 1328.
- Stops a scheduled Public Trustee foreclosure sale the day you file
- Cures mortgage and car arrears over 36 to 60 months
- Pays priority tax debt through the plan, usually with no further penalties or interest
- Protects home equity above Colorado’s $250,000 homestead exemption
- Reduces some car loans and second mortgages to what the collateral is worth
- Ends garnishments, including the 20 percent Colorado creditors can take
Colorado Practice
How does a Chapter 13 case run in the District of Colorado?
All Colorado cases go through the bankruptcy court in Denver. In recent District of Colorado Chapter 13 cases, the confirmation hearing has commonly appeared on the docket roughly four to six weeks after filing, although the actual timing varies by case and court scheduling. Because the hearing can come that early, the plan, the schedules, and the first plan payment all need to be right from the start. The 341 meeting with one of the district’s two standing Chapter 13 trustees is held by Zoom about a month after filing, and the first plan payment is due within 30 days of the petition under 11 U.S.C. § 1326(a). Objections from the trustee or a creditor are resolved before confirmation, and once the plan is confirmed the court’s order binds everyone.
| Step | When | What happens |
|---|---|---|
| Petition and plan filed | Day 0 | Automatic stay takes effect; foreclosure sale, garnishment, and lawsuits stop; case assigned to a standing trustee |
| First plan payment | Within 30 days | Paid to the trustee under § 1326(a), usually by payroll deduction or bank draft |
| 341 meeting | About day 30 | Zoom meeting with the trustee; we attend with you |
| Confirmation hearing | Set by the court; in recent cases often within the first several weeks, varying by case | Trustee and creditor objections resolved; plan confirmed by the court in Denver |
| Plan term | 36 to 60 months | Payments distributed to creditors; you keep the property covered by the plan |
| Discharge | Plan completion | Remaining eligible unsecured debt discharged under § 1328 |
Colorado Foreclosure
Why Chapter 13 is the tool for a Colorado foreclosure
Colorado foreclosures are fast because they are mostly nonjudicial. The lender files with the county Public Trustee, obtains an order authorizing sale after a Rule 120 hearing, and the property is sold on the Public Trustee’s schedule, often within four to five months of the first notice. There is no post-sale redemption period for the borrower in Colorado on most residential loans, so once the hammer falls the house is gone. A Chapter 13 petition filed before the sale stops it under § 362 and lets you cure the arrears over the life of the plan while resuming regular payments, a right the Bankruptcy Code gives you in § 1322(b)(5) that no lender has to give you outside of bankruptcy.
The same tool works on a car about to be repossessed, an HOA lien, or a judgment lien that a creditor is trying to enforce against your home. Timing is everything, so if a sale date is set, call before it, not after.
The Attorney-CPA Difference
A plan is a five-year budget. Ours are built by a CPA.
A Chapter 13 plan lives or dies on its numbers. Disposable income under § 1325(b) is computed from the same IRS expense standards the means test uses; the liquidation test requires knowing exactly what a Chapter 7 trustee could have sold; and tax claims have to be sorted into priority, secured, and general unsecured before the plan can be drafted. Get any of it wrong and the trustee objects, or worse, the plan fails in year three.
Because we also handle the tax side, we can do things a pure bankruptcy firm can’t: file the missing returns that the trustee will demand under § 1308, negotiate the IRS’s proof of claim, and use the plan to pay priority tax without the penalties and interest an installment agreement keeps charging.
- Plan payment computed from real income and Colorado expense standards
- Delinquent returns prepared in-house before the 341 meeting
- IRS and Colorado Department of Revenue claims reviewed and, when wrong, objected to
- Liquidation analysis against Colorado’s actual exemptions
- Flat fee, with the balance payable through the plan when that helps
Questions & Answers
Chapter 13 questions, answered
How fast does Chapter 13 stop a foreclosure in Colorado?
Immediately, as long as the petition is filed before the Public Trustee’s sale. Colorado foreclosures run through the county Public Trustee under C.R.S. § 38-38-101 and following, with a Rule 120 hearing and a sale date, and the automatic stay under 11 U.S.C. § 362 halts that sale the moment the case is filed. The missed payments are then cured through the plan over three to five years while you keep making the regular mortgage payment.
How long is the plan?
Three years if your household income is below the Colorado median for your household size, five years if it is above (11 U.S.C. § 1325(b)(4)). Above-median filers can sometimes finish sooner by paying unsecured claims in full.
Who is the Chapter 13 trustee in Colorado?
The District of Colorado has two standing Chapter 13 trustees, and cases are assigned between them. Both hold 341 meetings by Zoom. Plan payments go to the trustee, who distributes them to creditors under the confirmed plan, and the trustee reviews the plan for feasibility and good faith before confirmation.
Is there a limit on how much debt I can have?
Yes. Chapter 13 is open to individuals with regular income whose noncontingent, liquidated unsecured debts are under $526,700 and secured debts under $1,580,125 (11 U.S.C. § 109(e), figures effective April 1, 2025). A bill pending in Congress in September 2026 would replace both caps with a single $2.75 million limit. If you are over the line today, Chapter 11 or Subchapter V is the alternative, and we’ll tell you which.
What happens to my tax debt in Chapter 13?
Recent income taxes that would survive a Chapter 7 are paid through the plan as priority claims, generally without post-petition penalties or interest, which often makes Chapter 13 cheaper than an IRS installment agreement. Older taxes that meet the discharge tests are treated like any other unsecured debt and typically paid pennies on the dollar. A tax lien recorded before filing is a secured claim and needs its own treatment in the plan.
Can I keep a car I’m behind on?
Usually. The plan can cure the arrears, and if the loan is more than 910 days old, the claim can be reduced to the car’s current value with the rest treated as unsecured. Loans newer than that are paid in full through the plan, often at a lower interest rate.
Behind on the house, the car, or the IRS? There is a plan for that.
A free Chapter 13 analysis with an attorney-CPA: what the payment would be, what you keep, and what gets discharged at the end.