Understanding Colorado Bankruptcy Exemptions
Every state has exemptions that help protect your assets during bankruptcy. However, each state offers different exemption amounts, so if you reside in Colorado, you must use the Colorado bankruptcy exemptions if you satisfy the residency test. This means you have resided in Colorado for at least two years. If you haven’t, then you would use the exemptions of the state you previously resided in. Continue reading to learn about the residency requirements.
The 730-Day Rule and the 180-Day Rule
If you have lived in Colorado for more than 730 days, you would use the state’s bankruptcy exemptions, which are referred to as the 730-day rule. If you do not meet this residency requirement but have lived in Colorado for at least 91 days, you would apply the exemptions from your previous state of residence, known as the 180-day rule.
This is crucial because whether you are moving to or from Colorado, you need to evaluate which state offers better exemptions based on your specific situation. To learn more about exemptions under the Bankruptcy Code, see §522(b)(3)(A).)
Finally, the Bankruptcy Code in Section 522 requires that you have owned the home a total of 1,215 days for the Colorado homestead exemption to apply.
Colorado Bankruptcy Exemptions
Once you have confirmed you meet the 2-year residency requirement, you will apply the exemptions to your assets. This helps determine what is exempt. Let’s start with the homestead exemption as an example.
According to Redfin: “In January 2025, home prices in Colorado were up 2.3% compared to last year, selling for a median price of $607,100.” Usually, a debtor’s first question is if they can keep their home.
In Colorado, the homestead exemption protects $250,000 in equity. This includes a mobile or manufactured home. If you are over the age of sixty, another $100,000 in equity is protected for a total of $350,000. Homeowners who are disabled or have a spouse who is disabled could also receive the benefit of the $350,000 in equity protection.
Once you confirm the value of your property, subtract the outstanding mortgage balance. In this example, I’ll use statistics from Colorado Loan Pro, where they state the average mortgage balance is $465,900. Subtracting the mortgage balance from the median price of $607,100 means there is $141,200 in equity. Because the Colorado homestead exemption is more than the equity in the home, the home is fully exempt or protected in this situation.
The Colorado homestead exemptions are found in 38-41-201 through § 38-41-209. For mobile or manufactured homes, please see Section 38-41-201.6.
Personal Property Exemptions
Colorado’s personal property exemptions protect other assets as well and are substantial at $12,000. In addition, there is the added benefit that married couples can usually double the exemption amounts if they own the property together.
The exemptions for personal property can be found at CO Rev Stat §13-54-102.
Motor Vehicle Exemption
Colorado allows bankruptcy filers to exempt up to $15,000 in equity in their car or more, depending on their situation. The exemption maxes out at two cars for one individual. If you’re over age 60 or have a disability, you can exempt up to $25,000 in car equity. Considering the rapid depreciation of cars, chances are your car will be fully exempt in bankruptcy.
The Tools of the Trade Exemption
In my research, Colorado seems to have the most generous exemption for the tools of the trade, which exempts up to $60,000 in equipment, and up to $20,000 if the tools are not part of your primary employment. For this reason, more Chapter 7 bankruptcies are filed in Colorado than Chapter 13. For the year ending in 2024, 26,986 Chapter 7 cases were filed, versus 7,308 Chapter 13 cases per the U.S. Bankruptcy Court system.
Other Personal Property
Household goods are also protected. While the exemption is maxed out at $6,000, household goods such as furniture usually have a limited value. The same applies to clothing, which is protected up to $2,000, and jewelry up to $2,500.
Burial properties and cemeteries sites are also protected, and no limit is posted in the statute. This is extremely important, especially for elderly debtors who sometimes have their burial sites paid off and face losing them with a Chapter 7 bankruptcy. Sometimes, they are forced to file Chapter 13 just to keep their cemetery lots.
To find information on the Colorado Bankruptcy Court System, including contact information for judges and staff, please follow this link. Information on the Colorado Bankruptcy trustees can be found via this link.
Please note that it is common to find errors with the exemption amounts. Always make sure to review multiple sources, including government sources such as the Colorado Revised Statutes. I have come across numerous sites using exemptions from 2021, but Colorado has substantially increased the exemptions since then.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.
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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
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