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Can I Keep My Home If I File Bankruptcy In Colorado?

Colorado Homestead Exemption

The Colorado homestead exemption allows homeowners who file bankruptcy to protect $60,000 of equity in their home ($90,000 if they are 60 or older). Unlike other Colorado exemptions, you cannot double the Colorado homestead exemption by filing a joint petition with your spouse. Equity is the difference between what you owe on your mortgage and what your home is worth. For example, if your home is worth $150,000 and you owe $125,000 (on all mortgages), you have $25,000 in equity. Under the Colorado homestead exemption, the entire $25,000 is protected.

Does The Colorado Homestead Exemption Help Me Keep My Home When I File Bankruptcy?

In most cases, you will not lose your home during your bankruptcy case as long as your equity in your home is fully exempt under the Colorado homestead exemption and you are current on your mortgage. If you have a taken out a loan that has been secured by your home (meaning you promised the lender it could have your home if you failed to pay the loan back), bankruptcy does not make that security interest go away. Although your legal obligation to repay the loan is eliminated by bankruptcy, if you default on your loan after you file the lender can still foreclose.

If you don’t make your payments on that loan, the lender may be able to take and sell the home, during or after the bankruptcy case. If you are not behind on your loan payments, you may be able to keep your home if you agree to can afford to keep making payments.

If you are behind on your loan payments, you probably want to file a Chapter 13 bankruptcy petition. Chapter 13 bankruptcy may allow you to pay what your home is currently worth versus what your loan amount is. Chapter 13 will allow you to “strip” or remove any second (or third) mortgages you have on your home. However, your home must be worth less than what you owe on  your first mortgage. What that means is that you’ll emerge from your Chapter 13 bankruptcy owing only your first mortgage. Chapter 13 also allows you to catch up on your back payments and bring the loan current.

Talk With A Colorado Bankruptcy Lawyer About The Colorado Homestead Exemption

To learn more about whether the Colorado homestead exemption will allow you to keep your home if you file Chapter 7 bankruptcy or Chapter 13 bankruptcy in Colorado, schedule your free, confidential consultation with a Colorado bankruptcy attorney today. You can use our online scheduling system to or call us at 303.331.3403 to schedule a consultation at a time that is convenient for you.

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Our bankruptcy attorneys in Denver, Colorado can safely guide you to a fresh financial start.
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Denver, CO
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