When a debtor decides to file for Chapter 13 bankruptcy, there is a limit on how much debt they can have. As of April 1, 2010 the debt limits for Chapter 13 bankruptcy will increase by 7 percent. Chapter 13 bankruptcy debt limits for unsecured debt will be $360,475 and for secured debt, the limit will be $1,081,400. What this means is that a debtor filing Chapter 13 bankruptcy cannot have more than $360,475 of unsecured debt and $1,081,400 in secured debt. If their debt exceeds the debt limits they may be prohibited from filing Chapter 13 bankruptcy and may need to file Chapter 11 bankruptcy instead.
Congress makes the decisions regarding Chapter 13 bankruptcy debt limits and adjusts the debt limits every three years on the first day of April. This year's upward adjustment of the Chapter 13 bankruptcy debt limit may benefit many debtors because many individuals are holding very high debt loads due to the rapid expansion of debt during the past 10 years. The upward movement of debt levels is especially pronounced in the growing level of secured debt because of skyrocketing housing prices in the early 2000's which saddled many debtors with hundreds of thousands of dollars in housing debt alone. So with the 7 percent increase on the debt limits, many more debtors will be able to qualify for Chapter 13 bankruptcy and repay their debts under reasonable terms. And while Chapter 13 bankruptcy debt limits increase to include more debtors there will still be many more who must file for Chapter 11 bankruptcy because they simply have too much debt. However, Chapter 11 bankruptcy can also be an effective tool for repaying debts under reasonable terms for even individual debtors. To find out more information about bankruptcy debt limits please speak with a Dallas-Fort Worth bankruptcy attorney about your specific financial circumstances.