National Association Of Chapter 13 Trustees Supports Proposed Bankruptcy Legislation
Newly proposed bankruptcy legislation would make it easier for debtors to seek bankruptcy protection and to be eligible for Chapter 13 bankruptcy. That proposed legislation, known as the Bankruptcy Threshold Adjustment and Technical Corrections Act (Senate Bill 3823), recently received support from the National Association of Chapter 13 Trustees (NACTT), according to an article in Business Wire. What should you know about the proposed bankruptcy legislation and the reasons it has received support from the NACTT? Our West Palm Beach bankruptcy lawyers have information to help you.
How Senate Bill 3823 Would Change Chapter 13 Bankruptcy Cases
If the newly proposed bankruptcy legislation passes, it would become easier for debtors to file for Chapter 13 bankruptcy and ultimately to receive a discharge at the end of a Chapter 13 bankruptcy case. With more debtors eligible to file for Chapter 13 bankruptcy, the proposed legislation could also have the effect of helping more homeowners to stop foreclosure and to retain their properties through a Chapter 13 bankruptcy case.
What are some of the ways in which the bill would change Chapter 13 bankruptcy cases? Currently, debtors are ineligible for Chapter 13 bankruptcy if their secured or unsecured debt exceeds a particular amount. Under the proposal, individuals would be able to qualify for Chapter 13 bankruptcy if they have less $2.75 million or less in overall debt, meaning that secured debt and unsecured debt would no longer be treated differently. That debt limit is also higher than the current limit, which is $1,395,875 in secured debt and $465,275 in unsecured debt.
In addition, the proposed legislation would permanently increase the debt limits under Subchapter V of Chapter 11 bankruptcy, allowing individuals to file for Chapter 11 under Subchapter V more easily if they are self-employed.
Support from the NACTT
The proposed changes to the law have received support from the NACTT. According to the article, NACTT President Mary Viegelahn, “as student loan deferments and mortgage forbearances come to an end, increasing the debt limits will help individuals and families impacted by COVID by providing them an option to reorganize their debt.” Viegelahn focused on the problematic ways in which “current debt limits in Chapter 13 bankruptcy exclude many households from being able to seek the financial help they need.”
If the bill passes, more individuals will be able to file for Chapter 13 bankruptcy in order to get relief without having to worry about the debt limits. In addition, even if a self-employed individual does not qualify for Chapter 13 with the increased debt limit, that individual may be eligible for the more streamlined Subchapter V bankruptcy under Chapter 11.
Contact a Bankruptcy Attorney in West Palm Beach
If you have questions about filing for Chapter 13 bankruptcy or if you want to learn more about your options for reorganization bankruptcy, you should seek advice from an experienced bankruptcy lawyer. One of the dedicated West Palm Beach Chapter 13 bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller can speak with you today about your circumstances and your bankruptcy options.