On July 1, 2015, new laws went into effect that increase the amount of certain exemptions in Colorado that protect real estate and personal belongings when someone files bankruptcy.
Exemptions are the rules that protect personal belongings up to a certain value and the equity someone has in their residence. In other words, exemptions keep the bankruptcy court from taking personal items, including cars, from most people who file bankruptcy. However, if something is considerably more valuable than the exemptions allow, the debtor may have to liquidate the item to pay the money to their creditors.
Below are the most common exemptions that people who file bankruptcy are concerned about, along with their new limits:
- Clothing – $2,000
- Jewelry – $2,500
- Books – $2,000
- Household goods – $3,000
- Tools of the trade – $30,000 if for the debtor’s primary gainful occupation; $10,000 for any other gainful occupation
- Vehicles – $7,500 ($12,500 for someone over the age of 60 or disabled)
- Primary residence – $75,000 ($105,000 for someone over the age of 60 or disabled)
To determine whether or not something is protected, you’ll have to determine the value of the item. For household goods and clothing, we generally use garage sale value. For vehicles, we usually look at what a seller would receive in a private sale. Residences can be trickier. Sometimes, using a value found online on a real estate site, such as zillow.com, is sufficient. Sometimes, we will suggest our clients have a comparative market analysis done. Other times, particularly when the market is robust, we will advise having an appraisal done.
An exhaustive list of the exemptions can be found at Colorado Revised Statute 13-54-102.
If you have questions about whether your real estate or personal belongings will be protected when you file bankruptcy in Colorado, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.