To be eligible to file Chapter 13 bankruptcy, a person can have only so much debt. This is because §109(e) of the Bankruptcy Code sets a ceiling on the amount of debt, both secured and unsecured, that a person filing Chapter 13 bankruptcy can have. In contrast, there are no debt limits in Chapter 7 bankruptcy.
Adjustments to the Chapter 13 debt limits are required by §104(a) of the Bankruptcy Code and are scheduled to occur every three years on the first day of April.
When these debt limits were originally enacted in 1994, they were set at $750,000 for secured debt and $250,000 for unsecured debt. The first adjustment occurred on April 1, 1998.
Since April 1, 2007, the Chapter 13 debt limits have been set at $1,010,650 in secured debt, and $336,900 in unsecured debt.
The new debt limits effective April 1, 2010 will be $1,081,400 for secured debt and $360,475 for unsecured debt. This change represents about a 7% increase in the allowed debt limits.
Lastly, to count towards these limits, debt must be liquidated and non-contingent.
A liquidated debt has a fixed or easily calculable amount as compared to an unliquidated debt where liability exists but the exact amount of that liability is unknown.
A non-contingent debt is owed whereas a contingent debt may or may not be owed depending on some other event happening which is necessary to fix the liability.
