2015 Chapter 13 Debt Limits for Bankruptcies filed through April 2016

Click here to see the current Chapter 13 Debt Limits effective April 1, 2016 and valid through 2019.

The chapter 13 debt limits for all of calendar year 2015 will remain unchanged from the 2014 debt limits. As of April 1, 2014 and continuing until the next debt limit adjustment on April 1, 2016, the chapter 13 debt limits are:

Unsecured debt limit:            $383,175

Secured debt limit:                $1,149,525

These 2015 chapter 13 debt limits are set by section 109(e) of the federal Bankruptcy Code and are adjusted (usually upward) every three years according to the consumer price index. The next chapter 13 debt limit adjustment will occur on April 1, 2016.

Note that the secured debt limit of $1,149,525 includes the total of all debt that is secured by personal and real property owned by the debtor including mortgages secured by real estate (i.e., residential homestead mortgages as well as mortgages on rental or commercial properties, if any) and other collateralized debts such as vehicle loans, equipment loans, etc. The secured limit may also include tax liens.

The unsecured debt limit of $383,175 includes the total of all amounts owed on unsecured lines of credit, credit cards, medial debts and other consumer debts, some taxes owed and even disputed debts in most cases. This unsecured debt limit is calculated per person in the event that a married couple files a joint chapter 13 bankruptcy case.

Any individual that is employed or self-employed in business is eligible for chapter 13 bankruptcy relief so long as the individual’s unsecured debts are less than $383,175 and secured debts are less than $1,149,525.

Individuals who exceed the chapter 13 debt limits still have the option to file under chapter 7 so long as their income qualifies under the means test, or they may otherwise file an individual Chapter 11 proceeding, particularly for individuals with income-producing asset holdings such as rental properties and other property holdings that could be liquidated in chapter 7.

If you exceed the 2015 chapter 13 debt limits, read more about alternatively filing under chapter 11 at What is Individual Chapter 11 Bankruptcy and Why Would I file an Individual Chapter 11?

Attorney Lynn Wartchow advises clients on which form of bankruptcy they qualify for and whether Chapter 7 or Chapter 13 fits their needs best.  Contact for a free consultation and more information on all your options available in bankruptcy.

My Bank Account was Levied—What Now? How to Stop Bank Levies and Have Levied Funds Returned to You by Filing for Bankruptcy Protection.

Chances are that if your bank account was levied, you were already aware that you owe an unpaid debt and, most likely, were served in the recent months with a judgment entered on a lawsuit. In Minnesota, many—but not all*—bank levies are typically the result of collection on a judgment for unpaid debts owed to the judgment creditor.

*Some creditors such as the taxing authorities, small business administration loans and other government-funded debts are permitted under law to levy bank accounts and garnish wages without having to first obtain judgment in a court of law.

The typical scenario leading up to a bank levy is that a defaulted unsecured debt such as a credit card or medical bill falls into collection and eventually ends up with a local law firm that commences a lawsuit by serving you with a summons and complaint. If that summons and complaint goes unanswered by the debtor, the creditor will typically obtain a judgment within a month or two for the amount owed plus any allowed attorney fees, interest and other costs. This judgment is then docketed in the county you reside and the creditor’s attorney soon thereafter commences collection efforts including wage garnishment and bank levies. You may also be served with post-judgment discovery asking you where you work, bank and for other details of your income that will aid the creditor in collection on the judgment.

Unlike a wage garnishment where prior notice is required, a bank levy can happen at any time without notice as soon as the judgment has been entered. If you are like most people, you probably have a bank account at any of the major Minnesota banks (US Bank, Wells Fargo, TCF, etc.) and/or you previously disclosed where you keep bank accounts when you originally applied for the credit card. All a judgment creditor’s attorney needs to do to levy your bank account is to serve a subpoena on each bank that they think you may own an account and your account is then levied for all money up to the amount that you owe on the judgment. A bank account levy is a serious financial set-back for most families, as it unexpectedly impairs your ability to pay your rent or mortgage due the next month. On some occasions, the levied funds may be returned without the need to file for bankruptcy but only if you can prove to the judgment creditor’s attorney that the money levied came from exempt sources such as social security or other need-based assistance.

For more information on lawsuits and judgment collection, see You’ve Just Been Served with a Lawsuit, Now What? and Collection on the Judgment – What to Know if You Are Facing a Wage Garnishment.

A bank levy is a common precursor to filing for bankruptcy relief. Either chapter 7 bankruptcy or chapter 13 bankruptcy will have the immediate effect of stopping all bank levies and wage garnishments. Additionally—and very importantly from a timing perspective—you may be able to get the levied funds returned to you if you act quickly. The general rule is that levied and garnished funds must be returned to you after you file bankruptcy if the following two criteria are met: 1) the total amount levied is at least $600 or more AND 2) you file bankruptcy within 90 days of the date that the levy subpoena was served on the bank, which is usually a day or two prior to the actual date the funds were levied from your account.  

Contact attorney Lynn Wartchow to discuss your bank levy and what you can do to have the levied money returned to you.