A record number of Coloradans filed for bankruptcy protection in August, many seeking shelter in Chapter 7 before a new law makes it more difficult to erase debts.
The U.S. Bankruptcy Court in Denver took 3,752 new filings during August, a 46.5 percent increase over August 2004, said court clerk Bradford Bolton.
The previous record was in March, when 3,367 Colorado individuals and companies declared bankruptcy, he said.
This year, bankruptcy filings in the state are up 19 percent over last year.
“It’s a very busy time,” Bolton said. “September will be high, too, and the first two weeks of October are going to be a zoo.”
The new law goes into effect Oct. 17. It will make it more difficult for some filers, particularly those with higher incomes, to qualify for Chapter 7 bankruptcy protection.
Instead, they may be forced to file under Chapter 13, in which they will have to repay much of their debt over a period such as five years.
“We’ve never had so many inquiries. It’s easily more than double what I normally see,” said Greenwood Village bankruptcy attorney Jon Clarke. “I’m having to perform triage because I can’t take all these cases.”
Bankruptcies had been growing steadily in Colorado as the state’s economic recovery lagged that of the nation, but the new law has accelerated the trend.
Nationally, filings were up 11 percent during the second quarter, according to the Administrative Office of the U.S. Courts.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
