• Home
  • Bankruptcy in Brief
  • ABC’s of Bankruptcy
  • Considering Bankruptcy
  • True Stories
  • Chapter 13
  • Blog
  • About
  • TOC

Northern California Bankruptcy Lawyer

On The Bankruptcy Soapbox

The Soap Box
  • How bankruptcy works
  • Mortgage Matters
  • Consumer Rights
  • You & Your Lawyer
  • Small Business
  • Family Law

Debt Limits Increase For Chapter 13 Bankruptcy

By Cathy Moran

debt limit increase

Debt limits to swell to $2.75M under new legislation

Legislation signed in June, 2022 raised the debt cap in Chapter 13 to $2.75M without regard to whether the debt is secured or unsecured.

In the Bay Area with its eyepopping mortgage balances, that will mean more families will be eligible to file Chapter 13.

The debt limits apply to debts that are liquidated and not contingent.

Why Chapter 13 rocks

Chapter 13 bankruptcy allows individuals to strip off worthless liens, cure home loan defaults, and pay recent taxes over time, without interest.

In Chapter 13, the person filing keeps ownership and control of their assets.  They create a plan to repay creditors, in whole, or more usually, in part from future income.

Why 13 is best

While in 13, they are protected by the automatic stay from collection actions. They have access to the bankruptcy court to enforce that protection.  The bankruptcy judge is also available to resolve disputes about the allowance of claims or mortgage accounting.

A great recent decision by the 9th Circuit determined that you don’t have to count liens that have passed through a previous bankruptcy as still being an unsecured debt.

There are no debt limits in Chapter 7 or Chapter 11.

Exemptions expand

The value of items protected by exemptions under the bankruptcy code also increased April 1.

This means little to Californians since the federal bankruptcy exemptions aren’t available in California.

Instead, we have the Code of Civil Procedure 703.140 series of exemptions which mimic the federal exemptions.  The dollar amounts of the §703 exemptions are found here.

The Federal Register published the Bankruptcy Code changes of other dollar amounts found in the Code, such as the cap on priority employee wage claims, preference safe harbors, and luxury goods purchases.

Enjoy the increases. They are with us for another three years.

 Image courtesy of geehall2.

More from the Soapbox

  • 7 Keys To Keeping Your House: Chapter 13 After You File7 Keys To Keeping Your House: Chapter 13 After You File
  • When Can I File Bankruptcy AgainWhen Can I File Bankruptcy Again
  • At Risk of Repossession?  How To Keep The Car & Pay LessAt Risk of Repossession? How To Keep The Car & Pay Less
  • Has Your Social Security Number Been Suspended?Has Your Social Security Number Been Suspended?
  • Bankruptcy Drives Credit Score SurpriseBankruptcy Drives Credit Score Surprise

Filed Under: Chapter 13, Featured Tagged With: 2019, bankruptcy debt limits, chapter 13

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Trackbacks

  1. New Chapt 13 Debt Limits | Sader Law Firm - Blog says:
    March 14, 2013 at 2:11 pm

    […] Continue Reading […]

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

What Happens To Your Bank Account in Chapter 13

Those considering filing a Chapter 13 bankruptcy worry about "what happens to my bank account?" Will the trustee take all the money? How do I pay my living expenses after I file? The short answer is: nothing changes. The account remains yours and available for all the expenses of day to day living. Because, … Read more

More Posts from this Category

643 Bair Island Road
Suite 403
Redwood City, CA 94063
Phone: (650) 694-4700
Phone: (650) 368-4700

Categories

All content copyright © Moran Law Group. All rights reserved.