Good news for those that have been trying to qualify for Chapter 13, but couldn’t because you had too much debt.  Currently,  Chapter 13 has debt limitations of $360,475 for unsecured debt that is not contingent and is liquidated, and $1,081,400 for secured debt that is not contingent and is liquidated.

And The New Chapter 13 Limits Are…..

However, for cases filed on or after April 1, 2013 the above limits will increase to $383,175 for unsecured debt and $1,149,525 for secured debt.  Not a huge increase by any means, but may be sufficient to enable some of you to file Chapter 13 now.   These amounts change every few years.

What Happens if You’re Over the Chapter 13 Limit?

Why does all this matter?  Unfortunately, if the reason for your desire to file Chapter 13 was to catch up on mortgage arrears, strip (remove) a lien from property or because you had too much income for a Chapter 7 case, your only option if you have too much debt for a Chapter 13 is to file a Chapter 11 case, which is significantly more expensive, involved, and riskier.  But that’s the law.  That’s why the increase in debt limits is important.

Determining which of your debts get included in the above limits can be tricky, so be sure to discuss this with an experienced bankruptcy attorney.  Debts you think are secured may not be, depending on what you are trying to accomplish in the bankruptcy, and which debts are liquidated or noncontingent can also be difficult to know without talking to an attorney.


Image Courtesy of  R/DV/RS