What are the Chapter 13 bankruptcy debt limit requirements?
Michigan debtors who have reached the point where they have run out of alternatives to get back on stronger financial ground will often consider bankruptcy. Personal bankruptcy is a proven and legal way to clear debt, but knowing which chapter is right for the individual’s needs can be confusing. For those who own property like a home, automobiles, jewelry, collectibles and more and want to retain them can use Chapter 13 to formulate a payment plan over three or five years to eliminate their debt and keep their property. However, there are rules that must be followed from the start. That includes meeting the debt limits.
The debt limits and how they impact a bankruptcy filing
There are fundamental requirements to file for a Chapter 13. Regarding debt limits, people can use this form of bankruptcy if they owe less than $394,725 in unsecured debt and less than $1,184,200 in secured debt. These numbers are not set in stone. They hinge on the Consumer Price Index (CPI). This weighs the prices of various services and items like food, transportation and medical care.
In the past 15 months, many people have amassed substantial medical debt. Medical expenses in general are unsecured. To eliminate that debt and retain their property, Chapter 13 could help to achieve that goal if it falls below $394,725. For some, reduced income through job loss or the ongoing health situation might have damaged their ability to earn as much as they did before and led to falling behind on their mortgage. Even those who qualified for mortgage forbearance under the CARES Act can still be confronted with financial problems in the future. Since real estate is likely secured debt through a mortgage, the debt being below $1,184,200 allows for a Chapter 13.
To successfully file for Chapter 13, having professional advice is beneficial
Extensions have given lifelines to people who were concerned about the end of CARES Act protections, but this will not last indefinitely and many might want to think about Chapter 13 bankruptcy now. This is a current worry for debtors and there are always others when dealing with overwhelming debt. When trying to eliminate these debts and keep properties, Chapter 13 could be a wise option to explore. To understand the benefits of Chapter 13 or if alternatives for debt relief would be better, having professional advice from the start can be useful.