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Effective April 1, 2013, new dollar amounts apply to bankruptcy cases.  Several provisions of the Bankruptcy Code contain certain dollar amounts that can affect whether you can file Chapter 7 or must file Chapter 13. Other changes can affect the amount of assets you may be able to exempt (protect) from your creditors.

Chapter 13 Bankruptcy Debt Cap

In order to file a Chapter 13 bankruptcy your secured and unsecured claims cannot exceed certain amounts. The maximum amount of unsecured debts  has been increased increased from $360,475 to $383,175. The maximum amount of secured debts has been increased from $1,081,400 to $1,149,525. (Section 109(e) of the Bankruptcy Code).  If either or both of the above debt caps is exceeded an individual is ineligible to be a Chapter 13 debtor.

IRA Exemption

Although IRAs have been exempt historically, the amount that could be protected was capped.  As of April 1, 2013, the amount exempt in an IRA increased from $1,171,650 to $1,245,475. (Section 522(n))

Homestead Exemption

One of the general changes made to the Bankruptcy Code with the 2005 amendments was a cap on homestead for people that may have recently relocated to another state or made a recent home purchase. If a home is purchased within 1215 days before filing bankruptcy the homestead exemption is capped.  The limit increased from $146,450 to $155,675. (Section 522(p))

Chapter 7 Means Test

In 2005 Congress included the means test in the Bankruptcy Code. One of hte purposes of the means test was to redirect debtors into Chapter 13 to repay some money to creditors.  The means test is a formula that takes into account monthly income and expenses that can be deducted. Some of the amounts that can be deducted are set according to IRS standards.  Those dollar amounts were also increased. This may allow someone who may not have qualified to file Chapter 7 before the increase now pass the means test. (Sections 707(b)(2)(A)(i)(I & II) and 707(b)(2)(B)(iv)(I & II))

 By Robert E. Tardif Jr.

Robert E. Tardif Jr.

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