Wondering if your debt is too high to qualify for Chapter 13 can keep you up at night. You might look at your mortgage, car loans, credit cards, maybe some tax or business debt, and feel completely unsure how any of it fits into the “limits” you see mentioned online. The idea of finally reaching out for help, only to be told you do not qualify, can feel overwhelming.
Many people in Oakdale and throughout Minnesota are in the same position. They have heard that Chapter 13 can help them save their home, stop garnishments, and catch up on past-due bills, but then they discover that Chapter 13 has strict debt caps. Most websites simply throw out numbers without explaining how those limits really apply to a real person with a mix of different debts.
At Lamey Law Firm P.A., we have spent decades guiding Minnesota families and small business owners through Chapter 13 and other bankruptcy options. We regularly sit down with people from Oakdale and surrounding communities, spread their statements out on the table, and work through how the federal Chapter 13 debt limits apply in practice. In this guide, we will walk through the same framework we use in our office so you can better understand where you might stand and what your options could be.
Why Chapter 13 Debt Limits Matter For Minnesota Filers
Chapter 13 is designed for individuals and couples with regular income who need time to reorganize their debts. It can be a powerful tool for catching up on a mortgage, stopping repossession, and dealing with tax or other debts in an organized way. However, Chapter 13 is not available to everyone. Federal law sets maximum amounts of debt you can have and still use Chapter 13, and these caps apply to Minnesota residents just like anyone else.
The law divides your total debt into broad categories. Secured debts include obligations tied to specific property, such as a mortgage on your Oakdale home or a loan secured by your car. Unsecured debts include things like credit cards, medical bills, and many personal loans. For Chapter 13, there is a separate cap for secured debt and a separate cap for unsecured debt, and you need to fall under both to qualify.
These limits matter because they help determine which chapter of bankruptcy may be available to you. If your debt falls within the caps, Chapter 13 can give you three to five years to catch up and pay what you can afford through a court-approved plan. If you are over the limits, you may need to look at Chapter 7, an individual Chapter 11, or non-bankruptcy options. Over the years, we have met many Minnesota clients who assumed they qualified for Chapter 13 based on rough estimates, only to discover that misclassified or overlooked debts pushed them over the line. Understanding how the limits work can prevent unpleasant surprises later in the process.
How Chapter 13 Debt Limits Work Under Federal Law
Chapter 13 debt limits come from the federal Bankruptcy Code. The law says that to be eligible for Chapter 13, your total noncontingent, liquidated secured debts must be below a certain dollar amount, and your total noncontingent, liquidated unsecured debts must be below a different dollar amount. These are not Minnesota-specific rules. The same caps apply in Oakdale, Duluth, or any other city in the country.
Noncontingent and liquidated are legal terms, but the ideas behind them are straightforward. A noncontingent debt is one that you definitely owe now, based on something that has already happened, such as signing a loan or using a credit card. A contingent debt depends on something else happening in the future, such as being required to pay on a guarantee only if the primary borrower defaults. A liquidated debt is one where the amount can be calculated, such as a loan balance or a tax bill. Many typical consumer debts, like mortgages, car loans, and credit card balances, are noncontingent and liquidated, so they are counted toward the Chapter 13 limits.
The actual dollar figures for these caps do not stay the same forever. Federal law provides that they are adjusted periodically to reflect economic changes. This means an article written a few years ago may show limits that are no longer accurate today. In our practice, we always confirm the current numbers before advising a client about eligibility. When you sit down with us at Lamey Law Firm P.A., we look at your debts through this federal lens, using up-to-date limits, then apply them to your specific Minnesota situation.
Secured vs. Unsecured Debt: What Really Counts Toward The Limits
To see where you stand against the Chapter 13 debt limits, we first sort your debts into secured and unsecured categories. Secured debts are obligations backed by specific property. Common examples in Minnesota include a mortgage on an Oakdale home, a loan secured by your car or truck, or a secured line of credit tied to a cabin or rental property. In some cases, tax authorities may have filed a lien on your property, which can also create a secured component.
Unsecured debts are not tied to any particular asset. These usually include credit cards, personal loans without collateral, medical bills, many older utility balances, and a lot of business debts that you signed personally. If you have a store credit card, a signature loan from a bank, or past-due medical balances with a hospital, those amounts generally fall into the unsecured category. These are the balances that typically get added together to see if you are under the unsecured cap for Chapter 13.
The real complexity arises with debts that are only partially secured. For example, suppose your Oakdale home is worth less than the amount owed on your mortgage, sometimes called being underwater. If your home is worth 280,000 dollars and your first mortgage balance is 320,000 dollars, only 280,000 dollars is truly secured by the house. The remaining 40,000 dollars is treated as unsecured for purposes of the Chapter 13 debt limits. The same split can occur with vehicles that are worth less than the loan balance or with second mortgages and home equity lines. In our office, we regularly review property values and loan balances so we can correctly divide debts between the secured and unsecured columns before comparing them to the federal caps.
Counting Tax, Business, and Co-Signed Debts Under Chapter 13 Limits
Many Minnesota residents have more complicated debt profiles than just mortgages and credit cards. Tax, business, and co-signed debts can play a large role in whether you fall under or over the Chapter 13 limits. These obligations are often misunderstood, which is one reason people misjudge their eligibility when they try to do the math on their own.
Tax debts can be especially tricky. Some taxes are secured by liens on your home or other property, which means part of the debt may be secured and part unsecured, depending on how much equity you have. Other tax debts are priority unsecured claims that must be treated in specific ways in a Chapter 13 plan, but they still count toward the unsecured limit for eligibility. For example, an income tax bill owed to the IRS or the Minnesota Department of Revenue is usually a noncontingent, liquidated debt that needs to be added into your unsecured totals, even if you are in a payment plan.
Business and co-signed debts add another layer. Small business owners in Oakdale often sign personal guarantees on leases, equipment loans, or lines of credit. Even if the business is a separate legal entity, the personally guaranteed portion usually counts as your own debt when we look at Chapter 13 limits. The same is true for co-signed debts, such as a parent co-signing a child’s car loan or student loan, or ex-spouses who both signed for a mortgage or credit card. Whether you file alone or in a joint case with your spouse affects how these debts are counted, but they do not disappear just because someone else is also on the hook. At Lamey Law Firm P.A., we take time to identify these less obvious obligations so your totals reflect your actual exposure, not just the balances you remember off the top of your head.
Real-World Minnesota Examples Of Calculating Chapter 13 Debt Limits
Numbers become clearer when you see them in context. Consider a hypothetical Oakdale family, filing jointly, with the following debts: a first mortgage of 260,000 dollars on a home worth 280,000 dollars, a second mortgage of 30,000 dollars, two car loans of 18,000 dollars and 10,000 dollars, 45,000 dollars in credit cards, and 12,000 dollars in medical bills. The first mortgage is fully secured by the home’s value. If the home value covers the second mortgage as well, that second mortgage also counts as secured. The car loans are secured by the vehicles. When we add those up, we get 318,000 dollars of secured debt.
The unsecured debts in this example would include the 45,000 dollars in credit cards and the 12,000 dollars in medical bills, for a total of 57,000 dollars. If none of the loans are underwater, no portion of the mortgage or car loans is treated as unsecured for purposes of the Chapter 13 limits. We would compare 318,000 dollars to the secured cap and 57,000 dollars to the unsecured cap as of the date of filing. This family is well below both caps in this illustration and could typically consider Chapter 13, assuming other eligibility requirements are met.
Now take a different example that is closer to the line. Suppose an individual filer in Minnesota has a home worth 260,000 dollars with a mortgage balance of 310,000 dollars, a car loan of 25,000 dollars on a car worth 18,000 dollars, 120,000 dollars in credit cards and personal loans, and 35,000 dollars in older income tax debt. For the mortgage, only 260,000 dollars is secured by the home’s value. The remaining 50,000 dollars is considered unsecured for the debt limit calculation. For the car, 18,000 dollars is secured and 7,000 dollars is unsecured.
If we total the secured amounts in this second scenario, we have 260,000 dollars plus 18,000 dollars, or 278,000 dollars in secured debt. The unsecured side includes 50,000 dollars from the mortgage, 7,000 dollars from the car, 120,000 dollars in credit cards and personal loans, and 35,000 dollars of tax debt, for 212,000 dollars unsecured. Depending on the current federal caps when this person files, that unsecured total may be close to or above the limit. These are simplified examples, and your numbers will look different. The point is that the way debts are split between secured and unsecured categories can dramatically change your eligibility picture.
People often forget old tax debts, medical collections that no longer show on a recent bill, or business guarantees that still exist. In our Oakdale office, we spend time checking property values, obtaining payoff figures, and reviewing tax transcripts and credit reports so we can assemble a complete and accurate calculation before we advise you on whether Chapter 13 is realistically on the table.
What If Your Debts Are Over The Chapter 13 Limits?
Finding out that your debts are over the Chapter 13 limits can feel discouraging, but it does not mean you are out of options. It simply means that Chapter 13, which is designed for people within certain debt ranges, may not be the right tool. When this happens, we look at the bigger picture of your finances and consider other paths that may better fit your situation.
For some high-debt individuals, an individual Chapter 11 case may be an option. Chapter 11 is more complex and is often associated with businesses, but individuals with debts above the Chapter 13 caps can sometimes use it to restructure their obligations. In other cases, Chapter 7 might be appropriate, especially if there is little realistic way to fund a repayment plan, even if your debt totals are high. Non-bankruptcy solutions, such as negotiated settlements or business workouts, may also be part of the conversation, depending on your income, assets, and goals.
When someone is just over the limits, there are also strategic questions to consider. For example, resolving a particular disputed debt, clarifying whether an obligation is truly contingent, or getting updated payoff information can sometimes change the totals. The key is that these are not decisions you should make alone or based solely on online articles. Because our practice covers bankruptcy, debt relief, and related financial matters across Minnesota, we can look at your entire debt picture and help you weigh these options in a way that fits your life, not just the numbers.
Why A Personalized Chapter 13 Debt Review Matters In Minnesota
Trying to determine your Chapter 13 eligibility using only a calculator and a credit report can easily lead you astray. We often meet Minnesota residents who have done their best to total up their debts, only to learn that they missed significant obligations or misclassified large portions of their balances. For example, someone may forget about a tax bill in collections, or may count the entire mortgage as secured even when the property value is far lower than the loan balance.
In our work at Lamey Law Firm P.A., we take a different approach. We ask you to gather mortgage and vehicle statements, bank and credit card statements, collection notices, tax documents, and any paperwork for business or co-signed debts. Then we walk through each item with you, classifying the debts and filling in missing pieces, such as updated payoff amounts or property values. This process can feel overwhelming if you try to do it alone, but with a structured review, it becomes manageable and often brings a sense of relief.
Just as important, we understand that sharing your full financial picture is not easy. Many of our clients arrive feeling embarrassed, isolated, or convinced that their situation is uniquely bad. We know from decades of practice in Minnesota that this is rarely true. Our role is not to judge the choices that brought you here, but to help you see clearly where you stand, how the Chapter 13 debt limits apply to you, and what realistic options you have. That clarity is often the first real step toward long-term financial recovery.
Talk With An Oakdale Bankruptcy Attorney About Your Chapter 13 Debt Limits
Understanding Chapter 13 debt limits in Minnesota is more than memorizing a couple of federal numbers. It is about correctly classifying and totaling your unique mix of mortgage, vehicle, tax, business, and unsecured debts so you can choose a path that truly fits your situation. When you have that clarity, you can stop guessing, stop fearing an unknown “no,” and start planning for real relief.
This guide can give you a framework, but only a personalized review can tell you where you actually stand. At Lamey Law Firm P.A., we meet with individuals and families from Oakdale and across Minnesota to walk through their debts line by line, explain how the Chapter 13 limits apply, and discuss whether Chapter 13, Chapter 7, Chapter 11, or another approach makes the most sense.
If you are worried that your debt might be too high, we invite you to reach out and talk with us about your options online or call (651) 309-8180.
