What Are Chapter 13 Debt Limits?
Chapter 13 bankruptcy allows individuals to reorganize their debts through a court-approved repayment plan, that typically lasts up to five years. One of the most important eligibility requirements is that your total debts must fall under certain limits set by the Bankruptcy Code. These limits are particularly relevant for high-debt individuals, such as those carrying large mortgage balances, significant student loans, or small business owners with a significant amount of personally guaranteed debt. If your total debt exceeds the statutory thresholds, you are ineligible to file for Chapter 13 bankruptcy but may qualify for chapter 11 bankruptcy which is a more expensive and complicated form of bankruptcy.
The Role of Debt Limits in Eligibility
Under Bankruptcy Code § 109(e), the debt limits for Chapter 13 bankruptcy are one of the determining factors of who qualifies to file for Chapter 13. These limits are periodically adjusted for inflation, as required by § 104(b) of the Bankruptcy Code. If either of your secured or unsecured debts are over the limit, you may not qualify for Chapter 13. A secured loan has a lien against an asset, such as a mortgage for a home or an auto loan. Unsecured debt includes obligations with no security interest, such as most credit card balances, personal loans, and student loans. Each type of debt counts toward their respective limits.
New Chapter 13 Debt Limits for 2025
As of April 1, 2025, the new debt limits for filing Chapter 13 bankruptcy are:
- $526,700 in unsecured debt
- $1,580,125 in secured debt
Previously, the debt thresholds were:
- $465,275 in unsecured debt
- $1,395,875 in secured debt
In response to the COVID Pandemic, the debt limits for Chapter 13 (and Subchapter V) bankruptcy cases were amended by the Bankruptcy Threshold Adjustment and Technical Corrections Act of 2022 (BTATC). The law had temporarily raised the Chapter 13 debt threshold to a combined $2,750,000 of total debt, removing the separation between secured and unsecured debts. However, the law expired on June 21, 2024, and the debt threshold for Chapter 13 reverted back to the separate and lower limits for each debt type. This temporary change seemed much more equitable for Chapter 13 debtors and will hopefully be brought back and made permanent in the future.
The 2025 adjustment to the Chapter 13 debt limits reflects a meaningful increase, allowing many individuals with higher debt burdens to qualify for Chapter 13 relief. While the 2025 adjustments are helpful, it is important to note that the reversion to separate limits last year may still disqualify some debtors—particularly in areas with high property values. These debt limits apply nationwide, regardless of local economic conditions. This poses a challenge in coastal states such as New York and California, where mortgage balances are often well above national averages. Similarly, borrowers with large student loan debts can easily exceed the unsecured debt cap when combined with other unsecured debt. Finally, debtors with large SBA loans that are personally guaranteed can easily exceed the debt limits for chapter a Chapter 13 bankruptcy filing as well.
Implications of the New Chapter 13 Debt Limits
The higher 2025 debt thresholds are welcome news for individuals previously excluded from Chapter 13 bankruptcy. Debtors who previously exceeded the limits imposed by the Bankruptcy Code under Chapter 13—especially those with large mortgages or student loans—may now benefit from the structured repayment framework that Chapter 13 offers. Compared to Chapter 11 bankruptcy, Chapter 13 is not only more cost-effective, but also has a higher success rate and is generally easier to navigate.
Contact the Law Offices of David I. Pankin, P.C.
If you were previously ineligible for Chapter 13 bankruptcy in the past due to debt limit restrictions, you may now qualify and should speak to an experienced bankruptcy attorney. At the Law Offices of David I. Pankin, P.C., we have over 28 years of experience in guiding clients through the Chapter 13 process with clarity and compassion. Call us today to schedule a free consultation at (888) 529-9600 or by using our easy online contact form.
