Chapter 13 Debt Limits

In Chapter 7 bankruptcies, the amount of the debt owed by the debtor isn't as vital a consideration in the case because the obligation is going to be discharged 100% and not paid back. Thus, a debtor filing a Chapter 7 bankruptcy must only focus their analysis on whether they qualify because of income, assets, or other issues. This isn't necessarily the case in a Chapter 13. Chapter 13's, you'll remember, are consolidated repayment plans. The analysis focuses on how much debt can be repaid over 3 to 5 years. This necessarily requires a determination of current monthly income versus expenses, as well as a comparison of that to the total amount of debt owed.

In a Chapter 13, then, there are limits on the amount of debt that can be filed on. As of April 1, 2013, the limits for secured debt (meaning those debts that are secured by property like a house or car) is at $1,149,525. The limit for unsecured debt (like credit cards, medical bills, etc.) is $383,175. These amounts are adjusted every three years, meaning we'll see another adjustment on April 1, 2016.

Total unsecured debt is calculated by combining the unsecured amount left over from any mortgages or car debts that are underwater, as well as any wholly unsecured junior mortgages, combined with all the regular unsecured debt listed on the appropriate schedule of your bankruptcy petition. Eligibility is normally determined based on the amounts listed on the schedules filed, but the court can certainly look at claims filed or other evidence if necessary.