Northern Colorado Bankruptcy Basics
There are times when people fall so deeply into debt that they cannot be expected to repay their creditors. Since today’s financial structures allow people to fall so deep into debt, it’s only right that individuals be allowed to get out of debt again. That’s where bankruptcy comes in. If you’re struggling with debt in the Northern Colorado area, call Jerry Sumner, Esq., a bankruptcy lawyer at The Sumner Law Office.
History of Bankruptcy and Debt
For centuries, individuals who owed debt were subject to servitude or imprisonment. You’ve likely heard of the debtors’ prisons of Western Europe or the indentured servants of early American history. Bankruptcy existed for centuries, but was largely viewed as a dishonest or even criminal practice. In the 1800s, bankruptcy became a completely legal means for individuals and businesses to overcome financial hardship.
Common Reasons for Filing
There are many reasons why an individual might file for bankruptcy—some are beyond one’s control, while others are a direct result of irresponsible practices.
- Excessive Credit: Credit card use can quickly get out of hand. Those who rely on credit may find themselves mired in late fees and high interest costs.
- High Medical Bills: Even a short stay in a hospital can lead to a bill of several hundred thousand dollars. Those with inadequate health insurance often find themselves in serious financial trouble when illness strikes.
- Job Loss: Most people rely on a regular income from their employer. Those who have the rug pulled from beneath them often turn to bankruptcy once their savings run out.
- Divorce: Divorce isn’t just a difficult time emotionally; it can tough on one’s finances, too. Legal costs, alimony, child support, and a shift in living situation can lead one or both spouses to resort to bankruptcy.
Types of Bankruptcy
There are several kinds of bankruptcy to help individuals and businesses in various circumstances. Here’s a brief look at three of the most common:
Chapter 7: This type of bankruptcy is for individuals who do not have sufficient means to repay their debts. During
Chapter 7 bankruptcy, a trustee may sell some of the debtor’s property and uses to proceeds to repay creditors. This rarely happens as Colorado has a wide range of exemptions that protects most assets.
- Chapter 11: Individuals and businesses may opt for Chapter 11 bankruptcy if they have the means to repay their debts. This type of bankruptcy is complicated and expensive, and mainly serves businesses.
Chapter 13 bankruptcy is a lot like Chapter 11, only it’s much more feasible for average Americans. By filing for Chapter 13 bankruptcy, a debtor can hold onto his assets as long as he adheres to a three- to five-year repayment plan.
The Sumner Law Office, P.C. can help you make sense of bankruptcy law so you can emerge from your financial hardship. Those filing for bankruptcy in Northern Colorado can rely on our expertise and dedication to our clients.