Lesson 16: Debt Limits for Chapter 13

Chapter 13 bankruptcy, also known as a Wage Earner's Plan, is subject to specific debt limits. These limits determine eligibility for filing under Chapter 13 and are adjusted periodically based on the consumer price index. If you're wondering about the nitty-gritty, think of it as the financial equivalent of checking if you have enough snacks for a movie marathon.

Current Debt Limits

As of the latest update, the debt limits for Chapter 13 bankruptcy are as follows:

  • Unsecured debts must be less than $419,275
  • Secured debts must be less than $1,257,850

For more information on debt classification, see Secured vs. Unsecured Claims.

Determining Your Eligibility

To determine your eligibility for Chapter 13 bankruptcy, you need to calculate your total secured and unsecured debts. Here is a simplified example:


    const unsecuredDebts = 200000; // Example unsecured debts
    const securedDebts = 900000; // Example secured debts

    if (unsecuredDebts < 419275 && securedDebts < 1257850) {
      console.log("Eligible for Chapter 13 Bankruptcy");
    } else {
      console.log("Not Eligible for Chapter 13 Bankruptcy");
    }

Debt Limit Increases Over Time

The debt limits for Chapter 13 have increased over time to account for inflation and changes in the economy. The following diagram shows the historical trend of these limits:

    graph TD
      A["2000"] -->|Unsecured: $269,250| B["2001"]
      B -->|Unsecured: $290,525| C["2002"]
      C -->|Unsecured: $336,900| D["2007"]
      D -->|Unsecured: $419,275| E["2019"]
      A["2000"] -->|Secured: $807,750| F["2001"]
      F -->|Secured: $871,550| G["2002"]
      G -->|Secured: $1,010,650| H["2007"]
      H -->|Secured: $1,257,850| I["2019"]

Impact of Debt Limits

The debt limits play a crucial role in determining whether Chapter 13 is the appropriate bankruptcy chapter for an individual. If your debts exceed these limits, you may need to consider alternatives such as Chapter 11 bankruptcy.

Conclusion

Understanding the debt limits for Chapter 13 is essential for determining eligibility. For further details on requirements and the filing process, visit our articles on Repayment Plan (Chapter 13) and Filing the Petition. For a deeper dive, you might enjoy Bankruptcy and Insolvency Accounting, Practice and Procedure.

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