Chapter 13 109(e) Debt Limits

The 109(e) limits for a consumer chapter 13 case are $336,900 for unsecured debts and $1,010,650 for secured debts. These debt limits are reasonable if a Debtor has one or two properties but with the California home prices as high as they are, a chapter 13 case may be out of the question for certain consumer debtors. The determination of what constitutes as secured debt is an ongoing contested matter as some Trustees take the stance that the debt is only secured as to the market value of the property. For instance, if the market value of the home is $1,000,000 but the lien is $1,200,000 one could argue that the extent of the security is only as to the market value, therefore making the $200,000 unsecured. If there are two liens attached to the property and the first exceeds the market value of the home, the second lien can be avoided through the bankruptcy but if the lien is considered secured until the lien is avoided, the Debtor would not qualify for a chapter 13 bankruptcy at the time of filing as the total secured amount exceeds the debt limit.