Planning for Chapter 13 Bankruptcy in 2024 and Beyond

If you have been considering a Chapter 13 bankruptcy filing but you are near the current debt limit, it is critical to seek advice from a bankruptcy lawyer in St. Petersburg as soon as possible because the expanded debt limit will soon revert unless Congress acts. As you might be aware, the passage of the Bankruptcy Threshold Adjustment and Technical Corrections Act in 2022 increased debt limits for small business bankruptcy under Subchapter V, and it also increased the debt limits for consumers filing for Chapter 13 bankruptcy. However, the expanded debt limit is currently set to sunset on June 21, 2024.

What that means is, unless Congress extends the provision, debtors who plan to file for Chapter 13 bankruptcy will no longer be eligible based on the extended debt limit. Our Florida bankruptcy attorneys can explain.

Current Chapter 13 Debt Limits and Eligibility 

Under the current, expanded debt limit made possible through the Bankruptcy Threshold Adjustment and Technical Corrections Act, an individual can be eligible for Chapter 13 bankruptcy if they have a combined amount of secured and unsecured debt of less than $2,750,000. However, as we noted above, this expanded debt limit will sunset on June 21, 2024. At that point, to be eligible for Chapter 13 bankruptcy, a debtor will need to be under specific debt limits for secured and unsecured debt.

Debt Limits If Congress Does Not Extend the Chapter 13 Debt Limit Further 

If Congress does not extended the date for the expanded Chapter 13 debt limit, then in order to be eligible for Chapter 13 bankruptcy after June 21, 2024 (and up through part of 2025, when the debt limits will change to account for inflation and other factors, as they typically do), a debtor will need to have limits of less than:

• $465,275 in unsecured debt; and
• $1,395,875 in secured debt.

To be clear, the debt limits after the sunsetting of the current provision are based on unsecured and secured debt individually, rather than a combination of the two.

What You Should Know If You Are Considering Chapter 13 Bankruptcy 

If you have debts above the two unsecured and/or secured limits cited above but less than the $2,750,000 amount that is currently the limit, you should speak with a lawyer about moving forward with your bankruptcy filing prior to June 21, 2024. Yet it is also important to know that, even if you cannot file before then and are no longer eligible for Chapter 13 bankruptcy, you can still file for a Chapter 11 reorganization bankruptcy.

Contact a Bankruptcy Attorney in St. Petersburg 

Whether you have questions about the debt limit in Chapter 13 bankruptcy and need assistance determining your eligibility to file, or you have general questions about Chapter 13 bankruptcy and other bankruptcy options for individuals, one of the experienced St. Petersburg bankruptcy lawyers at the Law Offices of Stephen Barszcz can assist you. We can speak with you today to learn more about your financial circumstances, and we can advise you about the type of consumer bankruptcy that is best suited to your needs and your situation. Contact us to discuss your case.

Sources:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics#:~:text=chapter%2013%20protection.-,Chapter%2013%20Eligibility,U.S.C.%20%C2%A7%20109(e)

congress.gov/bill/117th-congress/senate-bill/3823