There’s some good news for homeowners and real estate investors. Currently, people seeking relief under Chapter 13, which allows debtors to reorganize and manage their property, can have no more than $307,675 in unsecured (such as credit card) debt and secured debts (such as mortgages) can be no more than $922,975. People with debt higher than those amounts cannot invoke Chapter 13. If they are trying to keep their home, Chapter 11 was the only other option available.

While Chapter 11 still affords the benefits of the automatic stay under Section 362 as well as other benefits, it also imposes other requirements on debtors. These include monthly operating reports to the US Trustee as well as quarterly payments to the US Trustee. Additionally, legal fees are often substantially higher than Chapter 13 because of the work involved in putting together a workable reorganization plan. These funds could be used to pay creditors and manage property. Unfortunately, real estate investors, even those with only 2 or 3 properties may be forced to consider this more expensive route because of the amount of secured debt they hold.

As of April 1, those debt thresholds are increasing: to be eligible for Chapter 13, unsecured debt can be no higher than $336,900 and secured debt can be no higher than $1,010,650. For those people who have just about $1 million in secured debt, there are more options come April 1. In light of all the bad news about foreclosures, this is good news.