Chapter 13 bankruptcy allows individuals to restructure their debts and create a repayment plan. Unlike Chapter 7, which involves liquidating assets, Chapter 13 focuses on helping people keep their property while making affordable payments. However, to qualify for Chapter 13, debtors must be under certain debt limits.
Unsecured debts in Chapter 13
Unsecured debts are those not tied to a specific asset. Credit card balances, medical bills, and personal loans fall into this category. You can include these debts in your repayment plan, but the total cannot exceed $465,275. If your unsecured debt surpasses this limit, you will not qualify to file Chapter 13.
Secured debts and their limit
Secured debts involve loans backed by property, such as a house or car. In a Chapter 13 filing, you can restructure secured debts as long as the total amount doesn’t exceed $1,395,875. Debtors make payments over a three- to five-year period, and the court adjusts the plan to fit the person’s financial situation. The key factor in these cases involves the total amount owed on assets like homes or vehicles.
Changes to debt limits over time
It’s important to know that debt limits for Chapter 13 can change. The government adjusts them periodically to reflect inflation and other economic factors. Therefore, anyone considering Chapter 13 should stay aware of these updates, as they could impact eligibility.
Exploring Chapter 13 eligibility
Understanding the debt limits for Chapter 13 helps individuals evaluate their options. For those within the threshold, it provides a path to regain financial stability without losing valuable assets.
