Which responsibilities and provisions are included in the Bankruptcy Threshold and Technical Corrections Act?

On June 21, 2022, a bill titled the Bankruptcy Threshold Adjustment and Technical Corrections Act was officially passed into law. The most important modification made to cases filed under chapter 13 is a considerable rise in the maximum allowable amount of debt. In the past, a person’s total unsecured obligations had to be lower than $465,275, and their total secured debts had not been higher than $1,395,875, in order to be eligible to file for bankruptcy under Chapter 13. According to the recently enacted legislation, there is just one overall aggregate debt maximum that must be met in order to be qualified to file for chapter 13 bankruptcy, and the number has been raised to $2,750,000. This new legislation does, however, have a sunset provision, which states that these amendments will be null and void as of June 21, 2024. (if not extended by further acts of Congress).

Consult Law Office of Corey L. Mills experts if you have any questions regarding bankruptcy, or specifically chapter 13 filing.

Is there anything I need to know about this? 

There is a sizable number of proprietors of small businesses who, in order to fund their enterprises, take on significant amounts of debt. The owner of the company has, in almost all cases, been required to personally guarantee business loans, credit card payments, office space leases, and other financial obligations. Even if the business initiative in question is unsuccessful, the owner of the company will still be responsible for paying off the debt. Before the passage of this law, the only option for filing for bankruptcy available to a business owner who was leveraged sufficiently to be able to afford to pay a portion of the debt but did not otherwise meet the requirements to file for bankruptcy under chapter 7 was to file for bankruptcy under chapter 11. The costs associated with filing for bankruptcy under Chapter 11 are significantly higher, and there is less predictability regarding the amount of debt that will be returned and the terms under which it will be repaid.

When it comes to legal fees, Chapter 13 is a significantly more affordable option, and when it comes to knowing what to anticipate in terms of monthly payments and the duration of the plan, Chapter 13 is a significantly more predictable one. In the final analysis, this amendment to the Bankruptcy Code is one that is very much appreciated.

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