Los Angeles Chapter 13 cases have always been tricky affairs. They still are. But now maybe less so. New debt limits for Chapter 13 have just been announced. The new limits take effect on April 1, 2013.
There will be a few more people eligible to file than previously. This could make it easier in some cases to lien strip a 2nd mortgage. The Los Angeles Bankruptcy Court has previously ruled that the lien to be stripped counts toward the unsecured debt total. This has disqualified some people from Chapter 13 relief. Some of those can now be helped.
Let’s not forget how difficult Chapter 13 cases are. Less than 1% of all Los Angeles Chapter 13 cases filed without a lawyer are successful, (SEE HERE). The new debt limits won’t change that statistic. What will change is that experienced Los Angeles Chapter 13 lawyers will be able to help a few more clients than we previously could have.
Bankruptcy Code Section 109(e) establishes debt limits for Chapter 13 cases. The law does not let you be a Chapter 13 debtor unless you meet these requirements. The debt limits generally break down into two categories. The categories are for secured debts, and unsecured debts.
Secured debts are obligations that are backed by some asset as collateral. Such as a house or a car. The asset can be repossessed if you default. Unsecured debts have no collateral. An unsecured debt has nothing that can be repossessed. In the event of default, the creditor proceeds directly against you to collect what is owed.
Los Angeles Chapter 13 – The New Debt Limits.
Here are the new limits. You can’t be a debtor in Chapter 13 if you have secured debts greater than $1,149,525. Also, your unsecured debts can not be greater than $383,175. The law speaks about eligible debts in terms of being non contingent and liquidated.
Generally speaking, non contingent debts are obligations that you already owe. Examples would be your house payment and your car payment. A contingent debt is an obligation you won’t ever owe unless some agreed upon future event takes place. A liquidated debt is an obligation where the amount you owe is easily determined. For example, an outstanding loan balance is a liquidated debt.
Debts that are contingent or unliquidated do not count towards these Chapter 13 debt limits.
Do you like reading questions and answers? You’re sure to like the “ASK LEON” question and answer column. Los Angeles Bankruptcy Specialist Leon Bayer answers real questions from readers. You will find it on the Nolo Publications bankruptcy blog web site. We are also found on Google+. This blog is a publication of Bayer, Wishman & Leotta. Youcan also learn quite a lot by reading our Human Guide to Bankruptcy. Bayer Wishman & Leotta has the capability to handle emergency bankruptcy cases. Bayer Wishman & Leotta is the home of the free bankruptcy consultation.