Debt Limits for Chapter 13 Bankruptcy Recently Increased

More and more we are seeing clients who make too much money to qualify for a Chapter 7 bankruptcy as a result of the “means test“.  (You can read more about the means test in our other blog postings).  For some of these individuals Chapter 13 appears to be their only option.  However, when we take a closer look at how much debt they have, some of them don’t qualify for a Chapter 13 case either.  Strange as it may seem, Congress has actually put a cap on the amount of debt you can have and still be eligible for a Chapter 13 bankruptcy.

Many of those same clients who didn’t qualify for a Chapter 7 bankruptcy had too much debt, either secured or unsecured to qualify for Chapter 13, leaving a more expensive, complicated Chapter 11 case as their best option.  However, some relief was recently offered when on April 1, 2010, the debt limits were increased.  Now, debtors can have up to $360,475 of unsecured debt and $1,081,400 of secured debt and still file Chapter 13.

You should still talk to an experienced bankruptcy attorney about your debts and whether they are counted toward these limits.  Not all obligations are included in the calculation and you may find that you thought you didn’t qualify for a Chapter 13 case, when in fact you do.  These issues are best addressed in a personal consultation with an attorney.  If you have questions about bankruptcy, please call us today or visit our website at