Section 109(e) of the Bankruptcy Code provides the “debt limits” for Chapter 13 bankruptcy cases: only a person whose claims against them are less than specific amounts is qualified to file a Chapter 13 case. Typically, the 109(e) limits are updated in the April of odd-numbered years
As of April 1, 2019, those limits will change again. For cases filed on or after April 1, 2019, the 109(e) limits will be $1,257,850 for secured debt (up from $1,184,200) and $419,275 for unsecured debt (up from $394,725). The Eastern District of California notice describing this and other changes is here.
Usually, secured debts are mortgages and car loans, which are “secured” by the house or car. Unsecured debts are basically everything else. If you have debts in either category over the limits, you are ineligible to file a Chapter 13 Case.
(There are other caveats, such as: the claims must be “non-contingent” and “unliquidated,” and some courts have held that nondischargeable student loans don’t count toward the 109(e) limit calculation. Ask your lawyer for more info about these issues.)
The 109(e) debt limits play a significant role here in the Bay Area, since mortgages exceeding $1.2 million are commonplace. Even a 6.2% increase such as this is welcome news to people close to the line.
If you are considering filing a bankruptcy case, regardless of your debt amount, you should speak with a qualified attorney about your options.