Section 109(e) of the Bankruptcy Code provides what are known as the “debt limits” for Chapter 13 bankruptcy cases. It provides that only a person whose debts are less than a certain amount may file a Chapter 13 case.
As of April 1, 2022, those limits are changing. For cases filed April 1, 2022 and later, the limits will be $1,395,875 for secured debt (up from $1,257,850) and $465,275 for unsecured debt (up from $419,275).
Usually, secured debts are mortgages and car loans, which are “secured” by the house or car. Unsecured debts are basically everything else. If your total debts in either category exceed those limits, you are ineligible to file a Chapter 13 Case.
The 109(e) debt limits can play more of a role here in the San Francisco Bay Area than they do in other parts of the country, due to the comparably high housing values and mortgages. This increase in the limit should prevent a significant number of people from being forced into a different chapter.
If you are considering filing a bankruptcy case, but have debts that are still higher than the new limits, you should speak with a qualified attorney about your alternatives.