Do You Have to Be a Resident of Colorado for a Certain Period of Time to File Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy

The U.S. Bankruptcy Code allows a debtor to file a petition for protection under a number of different chapters of the code. A Chapter 7 petition is often referred to as a "liquidation" and is generally used by low-income debtors who have limited assets. A debtor must meet a means test in order to file for Chapter 7 relief. In a Chapter 7 bankruptcy, all assets that are not exempt are sold and the proceeds used to pay creditors. All remaining debt that is legally dischargeable will be discharged, meaning the debtor no longer owes the debt.

Bankruptcy petitions are filed in federal court and are therefore under the jurisdiction of the federal courts. While federal law applies to bankruptcy proceedings, state laws also apply to exemptions and may provide more protection to debtors than the protection afforded under federal law. State law may provide additional protections to residents above and beyond those that a federal law gives a citizen. Colorado, for example, allows exemptions for debtors who are considered residents of the state.

You may file a petition for bankruptcy in Colorado as soon as you determine that you are domiciled in Colorado. The federal bankruptcy rules do not require you to live in a state for a specific period of time before you may file for bankruptcy in that state. Federal rules, do however, require you to live in a state for the preceding 730 days, or two years, in order to qualify for the state's exemption laws. If you lived in more than one state for the previous two years, then you must use the exemptions in the state where you lived for the majority of the preceding 180 days.

Although you are not required to obtain an attorney to file a petition for bankruptcy, the process is very technical and an error can cause the petition to be dismissed. A Chapter 7 bankruptcy starts by filing a petition in the federal bankruptcy court located in Denver. All necessary forms can be found on the U.S. Bankruptcy Court -District of Colorado website. Once the petition is filed, the court will enter an automatic stay which precludes creditors from continuing or initiating any collection efforts. A meeting of creditors will take place about 60 days after filing the petition. At the meeting, creditors have the opportunity to object to the petition if they have legal grounds. If no valid objections are filed, the court will discharge the bankruptcy approximately 60 days later.