COLUMBIA, S.C.--(BUSINESS WIRE)--The National Association of Chapter 13 Trustees (NACTT) and its members support Senate bill S. 3823, the Bankruptcy Threshold Adjustment and Technical Corrections Act, as a proactive step towards making bankruptcy an equitable solution as more Americans face financial hardships.
If passed, the bill would increase the debt limit for individuals to qualify for Chapter 13 bankruptcy to $2.75 million and simplify eligibility by considering overall debt and removing the distinction between unsecured and secured debt. For self-employed individuals who are not eligible for Chapter 13 even with the expanded debt limit, the legislation also provides a permanent increase in debt limits under Subchapter V.
Chapter 13 bankruptcy allows individuals to restructure debt by proposing a reasonable repayment plan suitable for both individuals and their creditors. It is also an effective method for families and individuals to restructure mortgages.
“As student loan deferments and mortgage forbearances come to an end, increasing the debt limits will help individuals and families impacted by COVID by providing them an option to reorganize their debt,” says Mary Viegelahn, NACTT President and Chapter 13 Trustee, San Antonio, TX. “The current debt limits in Chapter 13 bankruptcy exclude many households from being able to seek the financial help they need.”
Currently, many self-employed individuals do not qualify for Chapter 13 bankruptcy under the current debt limits. The increase in the debt limit will make Chapter 13 available to more self-employed individuals who have personally guaranteed their business debt and have suffered during COVID.
Chapter 13 bankruptcy benefits Americans by allowing individuals to retain possession of key assets such as a home and car in addition to being one of the less costly and more administratively friendly bankruptcy chapters. Creditors often receive a better recovery in Chapter 13 as more funds are used for repayment versus administrative fees. Increasing the debt limit in Chapter 13 to allow more eligibility can allow a greater return to creditors and assist Americans in recovering from financial hardships.
About the NACTT
Founded in 1965, the National Association of Chapter 13 Trustees is a membership association comprised of more than 1,000 trustees, attorneys, certified public accountants, and other individuals interested in insolvency related issues. The association is dedicated to the highest standards of education related to Chapter 13 bankruptcy. For additional information, visit http://www.nactt.com.
