What is the Bankruptcy Means Test in Colorado?

If you are riddled with debt and thinking about filing a Colorado bankruptcy, you are not alone. Henry Ford, America’s businessman filed bankruptcy after his first failed attempt at manufacturing vehicles. Walt Disney also filed for bankruptcy relief after his first go at Disney Studios was unsuccessful. If that is not enough to convince you, then just look at Colorado's Fate Brewing Company, which filed for bankruptcy just last year after failing to pay taxes. Filing a Colorado bankruptcy may give you a much-needed breath of fresh Rocky Mountain air. If you have decided that you want to move forward with filing bankruptcy you will have to pass the bankruptcy Means Test in Colorado. The bankruptcy Means Test in Colorado determines who is eligible for a discharge under a Chapter 7 bankruptcy based on an income threshold test set by the federal government. In 2005, Congress enacted the Bankruptcy Reform Act to stop fraudulent bankruptcy filings by people who could afford to pay their debts. The new law put limitations on who can file a Chapter 7 bankruptcy and get a discharge. The income limits to qualify under the Chapter 7 Means Test are set the Census Bureau’s Median Family Income Data. To pass the Chapter 7 means test and qualify to file our Colorado bankruptcy as a Chapter 7, your income must be below Colorado’s household median income. If you’re above the median income for Colorado, you still may be eligible to file for Chapter 7 bankruptcy, as long as your disposable monthly income, or what’s left after paying certain expenses, is below a certain amount. 

Colorado Median Income Levels

Discharge in Bankruptcy for Colorado

A Colorado bankruptcy discharge is the ultimate goal of every debtor because it means that you do not have to pay back your creditors. It also means that creditors are no longer allowed to go after you for failing to pay your debts. If your case is dismissed or you are denied a discharge you are still responsible for your debts. You should be aware that not all debts are dischargeable. Some non-dischargeable debts include child support, student loans, and most tax debts. If your debts are not discharged then you are still responsible to pay them back. It is important to understand that a discharge does not mean your bankruptcy case is closed. Your bankruptcy case usually closes after the Court enters your Colorado bankruptcy discharge. Note that getting a discharge is not an absolute right. The Bankruptcy Court can deny your discharge for many reasons. If you lie, hide assets, don’t show up to your 341 meeting, or file a frivolous petition, your Colorado bankruptcy discharge can be denied or even revoked after the fact, even though you passed the Chapter 7 means test. In order to get your discharge you not only have to be honest, but you must also show the Court that you qualify for your Colorado bankruptcy dischargebased on bankruptcy Means Test in Colorado. 

Colorado Means Test Calculator

The Colorado Means Test calculator is used to determine whether you can file your Colorado bankruptcy as a Chapter 7 bankruptcy. The Chapter 7 Means Test compares your household income with the median household income for a family of the same size in Colorado. In order to see if you qualify, you need to have information on all of your sources of income, such as paycheck stubs. You can use online calculators to help you calculate. The Colorado means test calculator looks at your disposable income to see if you qualify for a Chapter 7 bankruptcy. It is important to make sure that the calculator you are using is accurate. The Chapter 7 Means Test figures change every few months, so it’s important that you calculate your figures using an updated calculator. Using an outdated Colorado Means Test calculator can prevent you from qualifying for Chapter 7 relief so accuracy is vital. If the information in your Colorado bankruptcy means test is inaccurate or out of date you may not realize you qualify to file your Colorado bankruptcy as a Chapter 7 case. Luckily, Upsolve always keeps its Colorado Means Test calculator up to date. 

What Happens If I Fail the Means Test for Colorado?

If you fail the Chapter 7 bankruptcy Means Test then you may want to start by reviewing your income and expenses. Sometimes, even a slight mistake on the Colorado bankruptcy Means Test can throw off your entire calculation. It is also important to thoroughly review your expenses. Often people forget to list some of their expenses. Unfortunately, not everyone who would like to file a Chapter 7 bankruptcy will pass the Chapter 7 Means Test. The Chapter 7 Means Test was intentionally designed to prevent individuals who have a “high” income from obtaining a discharge in a Colorado bankruptcy filed as a Chapter 7. If your income is too high then you may have to file a Chapter 13 bankruptcy or wait to see if your income changes in the future. If you believe that you have “failed” the bankruptcy Means Test in Colorado and you have exhausted all of your options, you may want to speak with a local bankruptcy lawyer. Upsolve can help you find a local bankruptcy lawyer that can provide you with a professional evaluation to see if you qualify for a Chapter 7 bankruptcy and go over the process with you.