New Bankruptcy Law Will Help More People Qualify for Chapter 13 Relief!

Congress recently passed legislation entitled The Bankruptcy Threshold Adjustment and Technical Corrections Act which the President signed into law on June 21, 2022. The changes to the law will help people because it significantly expands who can qualify for Chapter 13 relief.  Chapter 13 is a reorganization bankruptcy for individuals which gives people an opportunity to restructure their debt through a court approved plan for a period of up to 60 months.

Purpose of Chapter 13 Bankruptcy

• Stopping home foreclosure and giving a homeowner an opportunity to keep their home and catch up the delinquent payments.
• Stopping wage garnishments.
• Stopping car repossession and giving the person a chance to catch up the payments.
• Paying delinquent income and property taxes.
• Restructuring unsecured debt such as credit cards, loans, and medical bills and allowing a person to possibly pay back only a small percentage of their unsecured debt.
• It might be filed because a person has assets that they might lose if they were to file a Chapter 7.
• A person might not qualify for Chapter 7 bankruptcy because they earn too much money.

Prior to the law change an individual could qualify for Chapter 13 if they had “noncontingent, liquidated, unsecured debts that aggregate less than $465,275 and noncontingent, liquidated, secured debts of less than $1,395,875.” 11 USC 109(e). Under The Bankruptcy Threshold Adjustment and Technical Corrections Act the debt limit is raised to an aggregate of $2,750,000 with no distinction between secured and unsecured debt. This will give relief to people who, before the law change, could not qualify for Chapter 13 and might have been forced to choose between filing a Chapter 7 or a Chapter 11, or not filing bankruptcy at all.

To learn more about your bankruptcy options, please contact us or call (248) 350-8220.