As the result of a new law passed by Congress in June of 2022, more small businesses and consumers will be able to consider the benefits of reorganizing under Chapter 13 or Subchapter V of Chapter 11 ("Subchapter 5").

 The most important provisions of the new law are increases in the debt limits for debtors under chapter 13 and Subchapter 5  - increases that will continue for at least two years.

The new law provides that the debt limit for debtors to qualify under Subchapter 5 is once again  $7,500,000. (When Subchapter 5 was first enacted, the debt limit was set at $2,725,625; this new law reinstates the higher limit established under  the CARES Act) .  The Act "sunsets" in two years on June 21, 2024.

Second, the Act increases the debt limit for filing chapter 13 bankruptcy cases. Previously, a debtor needed to have under $465,275 in noncontingent, liquidated unsecured debt and under $1,395,875 in noncontingent, liquidated secured debt to file under chapter 13. The Act combines and increases the unsecured and secured limits into one figure. Now, the aggregate debt limit for noncontingent, liquidated debt (both secured and unsecured) is $2,750,000. This increased debt limit also sunsets on June 21, 2024, at which time the original debt limits are set to be reimposed.

If you have questions about reorganizing your small business or consumer debts under either Subchapter 5 or Chapter 13,  please call the Bankruptcy attorneys at Evans & Evans, P.C. at (978) 548-5174, or text us at  (978) 471-4178.