Bipartisan Senate Plan Would Raise Chapter 13 Debt Limit

Inflation, high real estate costs and other factors can increase the amount of debt that someone carries, even if they are earning a steady income. When someone in this position requires assistance to stop creditor harassment, a Chapter 13 repayment plan is often the best solution. Under this program, a debtor is protected against collection actions, and develops a personalized schedule to pay what they owe over a period of three or five years. 

When the COVID-19 pandemic hit the United States, causing major economic disruption along with the tragic human toll, Congress temporarily raised the amount of debt someone could have and still seek Chapter 13 relief. During that period, an individual could establish a repayment plan as long as their total debt did not exceed $2.75 million. However, once this temporary measure expired, the limits reverted to their previous standard. With an adjustment for inflation in 2025, Chapter 13 requires you to have secured debt no greater than $1,580,125 and maximum unsecured debt of $526,700.

Secured debt is backed by collateral. Common examples include home mortgages and car loans. On the other hand, unsecured creditors have no property they can foreclose upon or repossess. Types of unsecured debts that frequently give rise to bankruptcy proceedings include medical expenses and credit-card balances.  

Now, there is a bipartisan effort in Congress to restore the $2.75 million overall debt limit for Chapter 13 bankruptcies. Like the pandemic rule, this standard would not distinguish between secured and unsecured debt. However, this would be a permanent level, with adjustments for inflation every three years. This change could restore access to Chapter 13 bankruptcy for Georgians who have substantial debt, such as large mortgages. 

If you’re not able to catch up on your financial obligations even though you are earning income, it’s time to speak with an experienced bankruptcy attorney. You can learn the current status of the Chapter 13 debt limit and the other laws that apply to your case. Should bankruptcy present the best option, your lawyer can guide you effectively through the legal process. 

Jeff Field & Associates represents Georgia residents in Chapter 13 actions and other bankruptcy matters. For a consultation, please call 404-381-1278 or contact us online. We have locations in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur.