The Huggins Law Firm, PA
Call to Schedule a Free Consultation
Columbia 803-764-1558 Charleston 843-509-0039

Changing debt limits for Chapter 13

Debtors in South Carolina who are considering legal options to resolve their substantial debt may be interested to know that there are calls for the debt limits for Chapter 13 bankruptcy to be modified or eliminated. If such a change were to be made, it would impact individuals who do not qualify for Chapter 13 with its current limits and for whom filing for Chapter 11 would be too expensive.

Chapter 13 bankruptcy allows individuals with a steady stream of income to get relief from debt while retaining ownership of their property. Debtors are required to submit a three-to-five-year payment plan that shows how future income would be used to pay a portion or all of their debt.

In order to qualify for Chapter 13 bankruptcy, individuals currently cannot have secured debt that totals more than $1,148,525 or unsecured debt that is more than $383,175. According to a speaker at a meeting held by the American Bankruptcy Institute Commission on Consumer Bankruptcy, the Chapter 13 limits for secured and unsecured debts are no longer appropriate.

When the Bankruptcy Code was established in 1978, there was worry that certain types of debtors, such as real estate investors with multiple assets, would file for Chapter 13 in order avoid the more costly and complicated Chapter 11. However, for many of the debtors who are over the debt limit, their issues and economic factors are not enough to justify taking on the cost and intricate nature of Chapter 11.

Individuals who have substantial debt and regular income may qualify for Chapter 13 bankruptcy. An attorney who practices bankruptcy law may assess the financial situation of clients and may advise how Chapter 13 may be used to reduce interest payments, stop foreclosures, stop harassment from creditors and provide a fresh financial start.

No Comments

Leave a comment
Comment Information

The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
Suite 201
Columbia, SC 29201

Phone: 803-764-1558
Fax: 803-764-1563
Columbia Bankruptcy Office

Columbia Office

Charleston Office
925-D Wappoo Road
Charleston, SC 29407

Phone: 843-509-0039
Fax: 866-481-2325
Map & Directions

Charleston Office