Q: If I file for bankruptcy in Colorado, will I lose my house?
A: Colorado law provides a homestead exemption of $75,000 (or $105,000 if you are over 60 or disabled). If the exemption is properly claimed in Schedule C of your bankruptcy petition, the trustee is bound by it. If you have more than that amount of equity, the trustee has the right to sell your house. In that case, the trustee would have to give you the exemption amount and then use the remainder to disburse to creditors. In close cases, you can usually get an agreement to pay the trustee a smaller amount and keep the house.
A: As long as your equity in the home is fully exempt, in most cases, you will not lose it during your bankruptcy case. You will still be able to keep the home, even if your property is not fully exempt if you pay its non-exempt value to creditors in chapter 13. However, some of your creditors may have a “security interest” in your home. This means that you gave that creditor a mortgage on the home. Bankruptcy does not make these security interests go away. If you don’t make the payments on that debt, the creditor may be able to take and sell the home, during or after the bankruptcy case.
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