Chapter 13 debt limits define who can take advantage of the power of Chapter 13. The debt test has two prongs: unsecured debt and secured debt. Come in under each prong and you meet the debt limits test.
For cases filed on April 1, 2025 and afterwards, the Chapter 13 debt limits are:
| UNSECURED DEBT | $526,424 |
| SECURED DEBT | $1,580,125 |
The precise numbers for secured and unsecured debts are adjusted every three years to account for inflation.
How debt is categorized
Unsecured debt is an obligation for which there is no collateral. Typical unsecured debts are credit cards, personal loans, medical bills, online extensions of credit.
Secured debt is debt in which the creditor has a lien on an asset which can be foreclosed if you don’t pay. Typical secured debt includes mortgages on real estate and car loans. Also secured are obligations imposed by law, like tax liens, property taxes, and money judgments.
When the loan was for business
It can get tricky if the loan in question was made to or for a business. Secured debt, for Chapter 13 elgibility purposes, means debt secured by the property of the individual filing bankruptcy.
So, if the business is a corporation or an LLC, debt secured by the entity’s assets is not “secured” for the purposes of the individual’s calculation. It’s the opposite if the business is a sole proprietorship; then as a matter of law, there is no difference between the individual and the business.
Measuring the secured claim
A claim is secured only to the extent that there is value in the collateral available for payment of the claim. So you might have a situation where a large tax lien has been recorded, but the value of the assets to which the lien attaches is far less than the tax due. Then, the claim is secured only to the extent of the available collateral value; the balance of the lien is unsecured.
Also, the claim is not just the principal owed, but the amount necessary to pay the debt in full. So, a secured home mortgage includes not only the principal balance, but any late fees, lender advances, and unpaid interest.
The other Chapter 13 eligibility requirements
There you have the Chapter 13 debt limits. But the debt limits are not the only eligility tests. Chapter 13 is only available to individuals. Corporations and LLC’s cannot file Chapter 13.
And, the individual must have a regular income from which Chapter 13 payments can be made.
