Planning and Filing Colorado Bankruptcy Cases

The best-planned bankruptcy cases go unnoticed. A few debtors glide through the system without attracting attention and receive full discharges in record time. Luck is not involved, but rather each successful debtor begins planning strategically a few weeks or months in advance. These debtors know something that you don’t.

Best 2010 Bankruptcy Strategies Explained

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Colorado Bankruptcy - Automatic Stay

In connection with every petition filed for Colorado bankruptcy, 11 U.S.C. 362 provides a "stay" of further collection of debts from a debtor's estate. The operation of the prohibition is automatically invoked without the necessity of court review, permission, or approval. After receiving a file number from the clerk, all debtors are immediately protected.

Creditors are assigned the burden of proving debtors are not entitled to relief should they file a motion to lift stay. Bans on legal action act as an injunction that prohibit creditors to begin or continue further collection efforts for a wide assortment of debts.

Colorado bankruptcy stops real estate foreclosures. With limited exception, all foreclosure actions are prevented whether judicial, non-judicial, filed, threatened or pending. All creditor actions for payment become null, without legal force or effect, and creditors may not recommence legal action unless obtaining specific permission from the court after notice and hearing. Debtors must receive written notice of all motions to lift the injunction and are provided with an opportunity to be heard before the court rules on these motions.

Colorado Bankruptcy Exceptions

The exceptions to an automatic stay are provided by 11 U.S.C. 362. For example, utility bills are covered by a special clause which allows for termination of service after 20 days. Many other types of collection efforts in a Colorado bankruptcy are prohibited by the automatic stay statute permanently, including the following: garnishment, phone calls, demand letters, and lawsuits for collection.

Creditors who violate the injunction knowingly are subject to sanctions. The court retains broad authority to prevent further violation and impose fines, civil sanctions, and criminal sanctions against creditors. Often creditors do not have actual notice when a case is filed, yet nevertheless must comply. Colorado bankruptcy courts tend to be lenient on creditors who violate the stay before actual notice is received. However, after a creditor receives notice, Colorado bankruptcy courts quickly grow intolerant of violations and sanctions for knowing violations are common.

The Code provides numerous options for individuals throughout its chapters. The effectiveness of available relief however depends on the unique circumstances and goals of each debtor. The most successful debtors select chapters and options based on a likelihood of success, that is, the probability of local judges accepting requests of the debtor's legal counsel.

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