Colorado Bankruptcy Exemptions: Home Equity, Vehicles, and Wages

If you file for bankruptcy in Colorado, state law lets you keep your home up to $250,000 in equity, two vehicles with up to $15,000 in combined equity, retirement accounts, most of your paycheck, tools you use for work up to $60,000, and a defined list of household goods and personal items. Colorado bankruptcy exemptions come from state statutes rather than the federal exemption list, and the dollar limits in those statutes decide what you keep and what a trustee can reach.

Why Colorado’s Own Exemptions Apply

Colorado is an opt-out state. Under Colorado Revised Statutes 13-54-107, residents filing bankruptcy cannot use the federal exemption schedule in Section 522(d) of the Bankruptcy Code and must use Colorado’s statutory exemptions instead.1Justia. Colorado Code 13-54-107 Federal exemption figures you see in general bankruptcy articles do not apply to a Colorado case. The numbers below are the ones that govern.

Home Equity

Colorado’s homestead exemption protects up to $250,000 of equity in your primary residence. If you or your spouse is 60 or older, or anyone in the household is disabled, the cap rises to $350,000. The exemption covers houses, manufactured homes, and cooperative housing units.2Justia. Colorado Code 38-41-201 – Homestead Exemption – Definitions

You have to claim the homestead exemption on your bankruptcy schedules. If your equity is within the cap, the house is protected. If your equity exceeds it, the outcome depends on your chapter. In Chapter 7, the trustee can sell the home, but you receive the exempt portion of the proceeds before any creditors are paid. In Chapter 13, you keep the house, but any equity above the cap affects what you have to pay unsecured creditors through your repayment plan. A home with $300,000 in equity leaves $50,000 of non-exempt value the plan must account for.

Vehicles

You can protect up to two motor vehicles or bicycles with a combined equity value of $15,000. The cap rises to $25,000 if you or a household member is 60 or older or disabled.3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions Equity is the current market value minus what you still owe. A car worth $20,000 with a $12,000 loan has $8,000 in equity, well within the exemption.

If you’re still paying on the car and want to keep it through Chapter 7, the lender will usually require either a reaffirmation agreement or redemption (paying the current value in a lump sum). Reaffirming waives the discharge for that loan. If you later fall behind, the lender can repossess and come after you for the balance just as if you’d never filed. Only reaffirm if you can comfortably afford the payments.

Wages

Colorado protects more of your paycheck from garnishment than federal law does. Under Colorado Revised Statutes 13-54-104, the most a creditor can take from a weekly paycheck is the smallest of three figures: 20% of your disposable earnings, the amount by which your earnings exceed 40 times the federal minimum wage ($290 per week), or the amount by which your earnings exceed 40 times the Colorado minimum wage ($15.16 per hour in 2026, or $606.40 per week).4Justia. Colorado Code 13-54-104 – Restrictions on Garnishment and Levy Under Execution or Attachment

Because Colorado’s minimum wage is more than double the federal rate, the state minimum wage calculation usually produces the most protection. On $700 per week in disposable income, a creditor could take at most $93.60 under the state formula, even though 20% of pay would be $140. If your disposable earnings fall at or below $606.40 per week, nothing can be garnished for ordinary debts.

Household Goods, Clothing, and Other Personal Property

Colorado exempts several categories of personal belongings, each with its own cap. Value items at what they would actually sell for today, not what you paid or replacement cost. A couch that cost $1,200 new may be worth $150 used, and used clothing usually has almost no resale value. Trustees rarely pursue household items because resale rarely covers the cost of collecting them.3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions

  • Household goods (furniture, appliances, kitchenware): up to $6,000 total.
  • Clothing: up to $2,000 for you, plus $2,000 for each dependent.
  • Jewelry and watches: up to $2,500 for you, plus $2,500 for each dependent.
  • Books, family pictures, and school materials: up to $2,000, so long as they aren’t business inventory.
  • Food and heating fuel on hand: up to $600.
  • Prescribed health aids such as wheelchairs, hearing aids, and prosthetics: fully exempt, no cap.
  • Firearms and hunting, fishing, and sporting equipment for personal use: up to $1,000 total.
  • National Guard equipment personally owned by Guard members: fully exempt.

Bank Accounts

Colorado exempts up to $2,500 held in checking, savings, or other depository accounts in your name. This is a cumulative limit across all your accounts, not per account.3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions If exempt funds like recent wages or Social Security deposits sit in the same account as non-exempt money, proving which dollars are protected gets much harder. Mixing exempt and non-exempt funds in one account is one of the most common ways people lose money they could have kept. Security deposits held by a landlord and utility deposits are also fully exempt from garnishment.

Tools of the Trade

If you’re self-employed or depend on specialized equipment for work, Colorado protects up to $60,000 worth of tools, equipment, supplies, electronics, and business materials used in your primary occupation. For a secondary occupation, the limit is $20,000.3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions Value tools at fair market value, not replacement cost. A camera system that cost $8,000 new may be worth $3,000 used. The exemption covers everything from a contractor’s power tools to an accountant’s computer setup.

Retirement Accounts

Colorado broadly exempts funds in retirement plans, including 401(k)s, traditional and Roth IRAs, pensions, deferred compensation plans, health savings accounts, and any plan qualifying under ERISA or the Internal Revenue Code. The state exemption has no specific dollar cap.3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions

Federal bankruptcy law adds a separate cap for traditional and Roth IRAs. Under 11 U.S.C. ยง 522(n), the combined value of all your traditional and Roth IRAs is protected up to $1,711,975 per person for cases filed between April 1, 2025 and March 31, 2028.5Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions Employer-sponsored plans like 401(k)s and pensions have no federal cap, and SEP and SIMPLE IRAs (which are employer-established) also receive unlimited protection.

One trap: if you withdraw retirement funds before filing, those dollars lose their exempt status and become non-exempt cash. Pulling money out of a 401(k) to pay credit card debt right before bankruptcy is one of the costliest mistakes filers make, because the retirement money was fully protected and the credit card debt could have been discharged.

Life Insurance

The cash surrender value of a life insurance policy is exempt up to $250,000, but only if you’ve owned the policy continuously for at least 48 months. Any extra payments beyond required premiums during those 48 months don’t count toward the exemption.3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions

Death benefit proceeds paid to a named beneficiary are fully exempt with no dollar limit, with two caveats: the exemption disappears if the beneficiary named is the insured’s own estate, and the proceeds are not shielded from the beneficiary’s own creditors. Term policies with no cash surrender value have nothing for a trustee to liquidate.

Public Benefits, Tax Credits, and Other Protected Funds

Several categories of income and benefits are fully protected:3Justia. Colorado Code 13-54-102 – Property Exempt – Commingled Exempt and Nonexempt Assets – Definitions

  • The entire portion of a federal or state tax refund attributable to the earned income tax credit or child tax credit.
  • Military pensions, compensation, and allowances for wartime or armed conflict service, with the protection extending to an unremarried surviving spouse and children.
  • Personal injury proceeds, except for debts incurred for treatment of those injuries.
  • Reparation payments to crime victims.
  • Insurance proceeds for exempt property that is destroyed or damaged, which keep the same exempt status the property had.

Social Security benefits are protected under federal law regardless of state exemptions. The protection covers both lump sums and recurring deposits, but keeping these funds in a separate account from non-exempt money makes them much easier to defend.

Shifting Assets Before Filing Can Backfire

Converting non-exempt property into exempt property before filing is a familiar strategy and has hard limits. The trustee can unwind any transfer made within two years before your filing date if you made it to put assets beyond creditors’ reach, or if you received less than fair value while insolvent. For transfers into self-settled trusts, the lookback extends to ten years.6Office of the Law Revision Counsel. 11 USC 548 – Fraudulent Transfers and Obligations

Selling property to a family member below market value, giving assets away, or suddenly paying down a mortgage with cash that would otherwise be non-exempt can all be reversed. The consequences go beyond losing the transferred property. A court that finds you deliberately hid assets can deny your discharge entirely, leaving you with all your debts intact and no bankruptcy protection.