Bankruptcy Code Chapter 13 Debt Limits

When considering a Chapter 13 Bankruptcy, an experienced attorney will review your debt to confirm they are within the debt limits. Section 109(e) of the Bankruptcy Code establishes debt limits for a debtor, or married couple, to qualify for relief under Chapter 13. As with many monetary amounts in the Code, the Chapter 13 Bankruptcy Debt Limits are adjusted on a regular basis.

Current Chapter 13 Debt Limits

Effective April 1, 2019, and effective for three (3) years, the applicable debt limits for Chapter 13 cases are:

  • Unsecured debt limit:            $419,275
  • Secured debt limit:                $1,257,850

On the date you file your Chapter 13 Bankruptcy petition, your debts cannot exceed these amounts or you cannot qualify for Chapter 13. The limits apply to the combined debt of married couples. The bankruptcy debt limits apply to non-contingent, non-disputed and liquidated debt.   The amounts will adjust again effective April 1, 2022.

Secured Debt

The secured debt limit ($1,257,850) is the total amount of any debt which is secured by any property. Property includes both personal property or real property such as a home, commercial property, or rental property. This includes mortgages on any real estate, including the debtor’s residence or rental or commercial properties. It may also include liens on personal property such as automobile loans, furniture loans, boat loans, etc. Federal, state and property tax liens may also be included in the total of secured debt.

Unsecured Debt

Unsecured debt typically involves credit cards, medical debt, personal loans but may also include other obligations.   For example, income tax liabilities or debts owed as a personal guarantor may count toward the unsecured debt total of $419,275. Debts arising from a personal guarantee may depend on the status of the payments to the creditor.

If you dispute that you owe a debt at all, the debt would be considered “disputed” because if you truly argue whether you are responsible, you may owe no money to that creditor.

Married couples who file a Joint Chapter 13 bankruptcy case can calculate the debt owed by each spouse under Section 109(e). However, if you owe a debt jointly with your spouse, the Bankruptcy Code will count that debt against both spouses for the debt limit purposes.

Debtors Exceeding Chapter 13 Debt Limits

If a Debtor exceeds the Chapter 13 Bankruptcy debt limits, they do not qualify for relief under a Chapter 13 case. Married couples who exceed the limits also would not qualify for Chapter 13. In this case, you would file for bankruptcy reorganization relief through an individual (or joint) Chapter 11 Bankruptcy filing because you do not qualify for Chapter 13.  

Keep in mind that there are other requirements to qualify for relief under Chapter 13. Chapter 13 requires that a debtor have “regular income” and other important considerations. It is important to review these issues before you proceed with a Chapter 13 Bankruptcy case.

Questions about Chapter 13 Bankruptcy Debt Limits?

The information provided here, as with all information on our website, is not intended to provide legal advice to anyone considering bankruptcy. If you are experiencing serious debt problems or discussing these problems with a friend or family member, the easiest way to learn how the bankruptcy laws may protect you is to arrange a Free Case Review with an experienced New Jersey Bankruptcy Lawyer. Learn about your rights and options before you make a decision from attorneys who have helped families and businesses for over 30 years. We know that making that first call is often the hardest step but once made, you can often find relief and a fresh start for your financial future.

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