It’s not an April Fool’s joke — the debt limits for Chapter 13 cases are scheduled for a periodic increase.
Effective April 1, 2010, the upper limits for debtors considering Chapter 13 will be $1, 081, 400 of secured debt, and $360, 475 of unsecured debt. This represents about a 7% increase over present levels.
Chapter 13 cases are usually sought by persons who are trying to “catch up” on a secured loan like a mortgage, or who have more property than the average person, which might be lost if they filed bankruptcy under Chapter 7.
The typical candidate for a Chapter 13 bankruptcy in Massachusetts or New Hampshire isn’t anywhere near these limits, but a few debtors may need to keep them in mind. A whopper million-dollar mortgage on a luxury home could do it, but a more likely scenario is a person with a string of apartment buildings or commercial properties, or someone who has been active in the real estate business and suffered a reversal with the market.
By Doug Beaton