How Much Debt Is Too Much For Chapter 13 Bankruptcy?
If you are considering the possibility of filing for Chapter 13 bankruptcy, you might already know that there are debt limits on this type of bankruptcy. These debt limits are typically the reason that an individual who wants to file for reorganization bankruptcy will file for Chapter 11 bankruptcy instead of Chapter 13 bankruptcy. However, you should know that the debt limits were recently raised, and many more individuals are eligible for Chapter 13 bankruptcy as a result of that increase in the debt limits. Our West Palm Beach bankruptcy lawyers can assist you with your reorganization bankruptcy, and in the meantime, we can provide you with more information about Chapter 13 eligibility and debt limits.
What Are the Current Chapter 13 Bankruptcy Debt Limits?
The current debt limit for a Chapter 13 bankruptcy case is $2,750,000. What that means is that, in order to be eligible to file for Chapter 13 bankruptcy, you must have a combined amount of secured and unsecured debt of less than the total debt limit, or less than $2,750,000. That debt limit took effect with the Bankruptcy Threshold Adjustment and Technical Corrections Act, which President Biden signed in June 2022. The debt limit provision of the law will sunset in two years, but it could be extended again, meaning that debtors will continue to be eligible for Chapter 13 bankruptcy if they have a combined amount of debt under that stated limit.
Prior to the increase in the Chapter 13 bankruptcy debt limits, Chapter 13 eligibility required debtors to have significantly less overall debt, and the debt limits were also further limited by specific amounts for secured and unsecured debt. In other words, debtors had to have under a certain amount of secured debt, and under a certain amount of unsecured debt, in order to qualify. The recent changes to the law do not require the debtor to distinguish between secured and unsecured debt for Chapter 13 eligibility.
What Are the Other Requirements for Chapter 13 Bankruptcy?
In addition to having a total amount of debt under $2,750,000, what are the other eligibility requirements? Generally speaking, Chapter 13 bankruptcy is limited to individuals (it is not an option for a business bankruptcy), and the debtor must have proof that they are a wage earner and will be able to make routine monthly payments for a period of three to five years in order to satisfy the terms of a repayment plan.
To learn more about filing for Chapter 13 bankruptcy and creating a repayment plan to reorganize debt, you should get in touch with a bankruptcy lawyer who can assist you.
Contact a West Palm Beach Bankruptcy Attorney
Are you considering Chapter 13 bankruptcy? Do you have questions about your eligibility for reorganization bankruptcy or another type of consumer bankruptcy? One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller can talk with you today about your circumstances and can provide you with more information about your bankruptcy options. Do not hesitate to get in touch with our firm for assistance.