Two years ago, Congress simplified Chapter 11 to make it more accessible to businesses needing to reorganize. The debt limit for eligibility was small. Then Covid hit and Congress anticipated many more businesses would need to consider filing, so it raised the limit to 7.5 Million, but that increase was about to expire.
On June 21, 2022, the Bankruptcy Threshold Adjustment and Technical Corrections Act was signed into law. The Act extends the increased limit for two more years.
Also, individuals who needed to file Chapter 13, for example those who needed to save their homes from foreclosure, could up to now only have about 1.3 million in secured debt and about $400,000 in unsecured debt to be eligible for Chapter 13. The new law substantially increases that, and now provides that an individual with regular income is eligible to be a debtor under Chapter 13 if the individual owes noncontingent, liquidated debts of up to $2.75 million as of the date of the petition. This provision will also sunset two years from enactment.
We are happy to discuss these changes. Call us at 561-389-8660. Mention this blog and get a free half hour consultation.