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A lot of people do not realize that Chapter 13 actually has debt limits. In other words, you can only have a certain amount of debt to qualify for a bankruptcy discharge (debt forgiveness) under Chapter 13. Chapter 7 and Chapter 11 don't have these same caps.
Chapter 13 debt limits adjust every three years based on changes in the Consumer Price Index. Though the most recent change to the limits became effective as of April 1, 2019. The Federal Register typically publishes notices when dollar amounts are revised pursuant to the Bankruptcy Code.
As of June 21, 2024 Chapter 13 debt limits are:
These limits are expected to stay in place through March 31, 2028, unless they're revised again.
Unsecured debts are debts where the creditor doesn't have collateral tied to the loan. For example, unsecured debts include:
Secured debts are sums that you owe a creditor who holds a valid lien on collateral. Examples of secured debts include mortgages, car loans, title loans, mechanic’s liens, and UCC statements.
Understanding the difference between unsecured debts and secured debts because each type has it's own limit under Chapter 13.
A question I hear often is: should I file Chapter 7 or Chapter 13 bankruptcy? You can use the calculator below to compare qualification and estimated costs.
Chapter 13 bankruptcy cases permit individuals, married couples, and self-employed individuals to reorganize or restructure their debts. To qualify you will need steady income and your debts must fall within the limits.
If your debts fall under the limit, Chapter 13 may be an excellent option. In a Chapter 13 case, you can get rid of most unsecured debts, save your home from foreclosure, and potentially lower your car payment. You may also be able to protect certain assets from being sold to repay unsecured creditors.
If you are interested in a Chapter 13 bankruptcy case, try our Chapter 13 payment calculator to estimate how much your Chapter 13 bankruptcy plan payment would be if you choose to file for Chapter 13 bankruptcy relief.
If you're over the limit, there still may be ways to qualify. Strategies for reducing debts to fall within Chapter 13 debt limits include:
If you're close to the limit, things can get complicated quickly. Consulting an experienced bankruptcy lawyer is typically the best way to proceed if you are determined to file for bankruptcy relief.
Before deciding to file Chapter 13, it is worth looking at all of your options. You may find that you can solve your debt problem without filing for bankruptcy relief. Non-bankruptcy alternatives for debt relief include:
If you're unsure which route makes sense, we can help you compare your options. We believe that you deserve to have all your options explained in a way that makes sense so that you can choose the option for getting rid of debt that works best for you.
If you have questions or need help, contact Ascend online or call/text us at 833-272-3631 to speak with a representative. Our goal is to help you become debt-free and take control of your finances so that you can have a strong, secure financial future.
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