chapter 13 debt limits
The current Chapter 13 bankruptcy limits include: medical expenses, funeral costs, and child support payments. The debtor will need to confirm these exclusions prior to initiating the bankruptcy process. Once you have filed your petition with the court, it is important to understand that this petition does not affect the balance of your obligations. In addition, a new loan cannot be set up while you are still under the supervision of the bankruptcy court. Current Chapter 13 Debt Limits The current chapter 13 bankruptcy exemptions include: medical expenses, funeral expenses, and child support loans payments. Effective April 1, 2021, and effective for six (6) years, the overall debt limit for Chapter 13 cases is: $4,750. The payment amount is determined by each individual debtor. The table below provides an example of monthly expenses and total expected family income for a debtor with income of:
All interest and principal owed on all accounts except for those specifically excluded remain after the six-year period. Some exceptions are specified for certain types of debts. These debts will be treated as unsecured debts only. Debtors must meet the standard definition of “disability” in order to meet chapter 13 debt limits. The court will determine an individual’s ability to pay based on their current income, financial resources, current debt levels, and other relevant circumstances.
excluded from chapter 13 debt limits
Excluded from the chapter 13 bankruptcy limits are debts that result from insurance defaults. They will also be excluded if a debtor has not begun making payments on the mortgage or debt account. Home Equity Lines of Credit is subject to the three-year limitation. Loans secured by homes may not exceed the seven-year maximum. After the six-year period, there is an unsecured debt limit of only the actual amount owed plus interests. The unsecured debt limit does not include the actual face value of the property securing the loan. This is called the first-year deferred installment limit. The second-year deferred installment limit is equal to the second-year deferred installment limit plus interest. The third-year deferred installment limit is equal to the third-year deferred installment limit plus interest.
Loans secured by intangible assets will be outside the chapter 13 debt limits if the loans total the greater of: the outstanding balance plus the greater of: the amount of the first debt or the total of the second debt secured by the intangible asset; or the difference between the first and second debts. As long as the first debt does not contain any non-liquidated assets, the second debt does not need to meet the first debt limit. Nontangible assets are those owned directly by the borrower. Such assets include automobiles, houses, businesses, shares, and foreign currency. Such assets also do not include those in real estate owned by the lender.
Tax Debt Relief – chapter 13 debt limits | debt | loan | limit | nontangible assets | assets} Any loan exceeding the limit is taxable income. Interest paid on such loans is generally tax-deductible to the extent of the excess loan amount. When the amount exceeds the limit, both the borrower and lender face an additional tax on the taxable part of the excess loan amount. If you owe taxes on intangible assets that exceed the non-taxable portion of your loan, talk with a professional about ways to negotiate the payment of these additional tax payments until the taxes are substantially reduced.