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Upcoming Changes to Subchapter 13 Bankruptcy Debt Limits Are a Call to Action for Debtors

June 17, 2024

The landscape of bankruptcy law is about to shift in a way that could significantly impact
consumers struggling with debt. Unless Congress acts in time, the debt limits for Subchapter 13
bankruptcies will revert to the lower limits that were in effect in March 2020 (subject to
adjustment for inflation).

Currently, the debt limits are set at $2,750,000 for secured and unsecured debts combined.
However, beginning June 21, 2024, these limits will be reduced, unless Congress acts. The
Chapter 13 threshold of $2,750,000 for both secured and unsecured debt will revert to a two-
part test that limits eligibility to a maximum of $465,275 for unsecured debt and $1,395,625 for
secured debt. That means that many consumers eligible for Chapter 13 debt relief under
today's guidelines may no longer be eligible under the lower debt limits that will come into
effect on June 21, 2024.

If you are considering bankruptcy as a viable solution for your financial woes, we urge you to
contact us immediately to determine what actions you should take to protect your financial

Why the Upcoming Changes Matter to Consumers

According to the U.S. Bankruptcy Code: “Subchapter 13 bankruptcy, also known as a wage
earner's plan, allows individuals with regular income to create a plan to repay all or part of their
debts. Under this subchapter, debtors propose a repayment plan that spans three to five years.
One of the critical eligibility criteria for filing under Subchapter 13 is that the debtor's secured
and unsecured debts must fall within specified limit.”

Some of the most significant consumer impacts of the reduced debt limits include:
Reduced Access to Debt Relief: The primary concern with lowering the debt limits is that fewer
consumers will qualify for Subchapter 13 bankruptcy. This form of bankruptcy is often preferred
because debtors keep their property and repay debts over time without facing the immediate
liquidation of assets that can occur in Chapter 7 bankruptcy. They can also avoid being forced
into a Chapter 11 reorganization that is often beyond a consumer’s means and might not be
confirmable unless the debtor is eligible for Chapter 11 Subchapter V

Increased Financial Stress: For many, Subchapter 13 offers a manageable way to handle
overwhelming debt while maintaining some financial stability. Lowering the debt limits may
push more people toward Chapter 7 bankruptcy, where they risk losing significant assets.

Limited Options for Debt Restructuring: Subchapter 13 is particularly beneficial for those with
substantial secured debts, like mortgages and car loans, because it allows them to catch up on
past-due payments over time. The new limits may force consumers into less favorable
bankruptcy options or leave them struggling with unmanageable debt without access to any
form of bankruptcy relief.

What You Should Do About It

Act Quickly: If you are considering bankruptcy, acting before the new debt limits come into
effect is crucial. Filing under the current limits will ensure you can take advantage of the more
lenient thresholds and potentially save significant assets and financial stability.

Consult a Bankruptcy Lawyer: Navigating the complexities of bankruptcy law can be daunting.
At BransonLaw, our experienced team can provide invaluable guidance tailored to your specific
financial situation. We can help you understand your options, determine the best type of
bankruptcy to file, and ensure that you meet all necessary deadlines.

Evaluate Your Debt Situation: Take a thorough inventory of your secured and unsecured debts.
This can help you make informed decisions about the best path forward.

Prepare Necessary Documentation: Gather all relevant financial documents, including income
statements, debt records, and asset valuations. Having this information readily available will
expedite the bankruptcy filing process and help us build a strong case.

BransonLaw Can Help

The impending reduction in Subchapter 13 bankruptcy debt limits represents a change that
could adversely affect many consumers. At BransonLaw, we can assess your financial situation
and help you decide whether bankruptcy makes sense for you and, if so, whether your business
qualifies for filing under Subchapter 13.

Call us today if you are considering bankruptcy. Don't miss this critical debt limit deadline. Our
team of experienced bankruptcy attorneys is here to guide you through the bankruptcy process
and help you get back on your feet. By taking proactive steps now, you can protect your
financial future and ensure that you have access to the debt relief you need. Don't wait until it's
too late—start the process today to secure a more stable financial situation tomorrow.

We are located in Orlando, Florida, and handle bankruptcy cases throughout the State. If you
live, own property, or operate a business in Florida and cannot manage your debt, call us
today. Our goal is to help you understand your options.