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Chapter 13 Debt Limit Increase - Bill signed today

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  • flashoflight
    replied
    bornfree2

    Here is a succinct explanation of the differences between chapter 7 and 11.

    Chapter 13 is a much more awesome tool than chapter 11. A trustee distributes the available funds based upon fixed rules regarding income and non-exempt assets. Meanwhile, the unsecured creditors have next to no say in it. There is no voting by unsecured creditors unlike chapter 11. Secured arrears can be resolved in 60 months without regards to the secured creditor's wish to resolve the arrears much quicker than 60 months. Chapter 13 legal fees are much cheaper than chapter 11.

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  • flashoflight
    replied
    Originally posted by justbroke View Post
    (Perspective: perhaps this means nothing for those living in States or Cities where the median home value is under $1,000,000 ... but once you get into major West Coast cities, these people were pushed into Chapter 11s which are not cheap and not easy. )
    Combined with the 2021 expansion of the $600k California homestead exemption, high income Californians can often completely protect their homes from creditors and resolve their unsecured debts with whatever is left after allowed household expenses and the fat mortgage payment. Not possible in chapter 13 with the much lower unsecured limits especially if you throw in student loans. The old secured debt limit was looking too small too. $2 million in SoCal or SF Bay is not a mansion. Even in financial distress, it pays to be a homeowner and not a renter.

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  • despritfreya
    replied
    bornfree2

    I don't think you get it. Increasing the debt limit for Chapter 13 SAVES the individual consumer a ton of $$$$ and heartburn. As to lawyers, if you read my post, I make MORE money by putting the client into a Chapter 11, not the Chapter 13. My first concern is for the client ergo since a Chapter 13 is cheaper, easier for a consumer to get through and poses additional benefits over a Chapter 11 for the consumer, there is nothing but "good" coming from the increase in the debt limit.

    One more item, next week I will actually be saving my client money as it relates to paying creditors. The IRS will not be getting interest on its priority claim - something he/she would have had to pay if he/she was forced into a Chapter 11.

    Now, if you really think China benefits from this. . .

    Des.

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  • bornfree2
    replied
    Originally posted by despritfreya View Post


    Already have a client who has been waiting and waiting for this increase. He/she is coming in next week to review what we can now accomplish for him/her in the much less expensive Chapter 13.

    Des.
    I should have added trustees and bankruptcy/legal industry. I should probably get that legal document preparer license after all.

    So the benefit flow is > China, bk lawyers, trustee, bankster, debtor (remains a debt slave to pay them all)

    China has been winning for a very long time...more bankruptcies means more cheap assets and neighborhoods to buy up. The thing is they are stealthy silent behind the scenes so its hard for the sleepy herd out there to ever connect the dots. Super smart economic war going on.


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  • despritfreya
    replied
    Originally posted by bornfree2 View Post
    Another gift to banksters and China
    I have to agree with JB's comment relative to the above. "Banksters" and "China" have nothing to do with this.

    What this means is a substantial reduction in overall cost for many debtors. Prior to this increase, those who needed to reorganize were forced into a Chapter 11.
    • My fees for a rather "simple" Chapter 13: Approximately $4,000 with $2500 due prior to filing - balance in the Plan.
    • My fees for a more complicated Chapter 13: Someplace between $6,000 and $8,000 with $2500 due prior to filing - balance in the Plan.
    • Court filing fee for a Chapter 13: $313
    • My fees for an individual (consumer) Chapter 11: $7,000 retainer and probably another $10,000 to $15,000 paid through the Plan.
    • Court filing fee for a Chapter 11: $1,738.
    You do the math.

    In addition, forcing a non-business savvy consumer into a Chapter 11 has its own problems since a Chapter 11 debtor acts as the trustee and has the duties of a trustee to account for estate assets and individually pay creditors. Very daunting and time-consuming to those who are not business oriented or just do not want to mess with the detail required.

    Already have a client who has been waiting and waiting for this increase. He/she is coming in next week to review what we can now accomplish for him/her in the much less expensive Chapter 13.

    Des.

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  • flashoflight
    replied
    Great news. A lot of mega size judgment buyers are probably crying today. Having large student loans won't inhibit the ability to file CH13 anymore. Credit card companies with a POC of $25000 will get $15 monthly checks or no check at all due to not meeting trustee minimums. They were benefitting from the debtor having a giant judgment or too much debt so locked out of CH13.

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  • justbroke
    replied
    Originally posted by bornfree2 View Post
    Another gift to banksters and China
    How? This allows a regular individual to discharge even MORE DEBT under Chapter 13 without having to file a Chapter 11.

    This value is known as the 109(e) limit for Chapter 13s.

    To me this means easier access to bankruptcy filings for people with > $1,395,875.00 in debt. This is approximately a $1.4M increase to the maximum allowed Chapter 13. This is a benefit to the debtors only!

    (Perspective: perhaps this means nothing for those living in States or Cities where the median home value is under $1,000,000 ... but once you get into major West Coast cities, these people were pushed into Chapter 11s which are not cheap and not easy. )

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  • bornfree2
    replied
    Another gift to banksters and China

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  • sophieanne
    replied
    Wow!!! That’s an interesting change.

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  • justbroke
    replied
    That's not too shabby.

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  • Chapter 13 Debt Limit Increase - Bill signed today

    Today, President Biden signed Senate Bill 3823 that increased the debt limit for chapter 13 to $2.75 million of noncontingent, liquidated debt without regard to the debt being unsecured or secured. This change is effective for two years, unless a new law is passed to extend or make the provision permanent.

    https://files.mail-list.com/m/azchap...-Bill-3823.pdf

    Des.

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