In order to be eligible to file for Chapter 13 bankruptcy, certain debt limitations apply. As of April 1, 2019, a debtor can have no more than $419,275 in unsecured debt (such as credit cards or personal loans) and no more than $1,257,850 in secured debts (such as mortgages and car loans). The limit amounts change every three years. Bankruptcy Law does not allow joint debtors to double the Chapter 13 debt limits. As a result, married couples are subject to the same Chapter 13 debt limits as a single filer.
Debtors who exceed the Chapter 13 debt limits need to file under a different chapter of bankruptcy. Debtors can file for Chapter 7 (liquidation) bankruptcy if they satisfy the means test. Chapter 7 has no debt limit. Debtors can also file for Chapter 11 (reorganization) bankruptcy, which also has no debt limit. Chapter 11 is the most complex and expensive form of bankruptcy, so it is used mostly by businesses and high income individuals. Debtors may also do a “Chapter 20” strategy, which is actually a Chapter 7 bankruptcy to discharge much of the unsecured debts followed by a Chapter 13 bankruptcy to restructure the remaining debts.