March 16, 2022

No Foolin’: Bankruptcy Code Changes Go into Effect on April 1

The adjustments are required to take place every three years pursuant to 11 U.S.C. §104. The new dollar amounts reflect an approximate, average 11% increase.

Here is a summary of some important adjustments:

  • Exemptions: The dollar amounts limiting exemptions that an individual debtor may elect to protect property from creditors and the bankruptcy trustee will increase under 11 U.S.C. §522. As one example, an individual may exempt up to $27,900 of an interest in real property or personal property that is used as a residence (up from $25,150). Accordingly, a married couple filing for bankruptcy may exempt up to $55,800 of equity in jointly owned real property.
  • Wage Claims: The cap on priority employee claims (i.e., any claim for wages, salaries, or commissions) will increase from $13,650 to $15,150. 11 U.S.C. §507(a)(4).
  • Farmers: A family farmer may file for chapter 12 with aggregate debts of less than $11,097,350 (up from $10,000,000). 11 U.S.C. §101(18).
  • Chapter 13: An individual may file for chapter 13 provided that his/her noncontigent, liquidated unsecured debts are less than $465,275 and secured debts are less than $1,395,875 (up from $419,275 and $1,257,850). 11 U.S.C. §109(e).
  • Preferences: The minimum amount that a trustee may attempt to recover in non-consumer preferential transfer cases will increase from $6,825 to $7,575. 11 U.S.C. §547(c)(9).
  • Involuntary Filings: The minimum aggregate claims threshold for an involuntary chapter 7 or chapter 11 bankruptcy filing by creditors will increase from $16,750 to $18,600.

A summary of all adjustments may be found in the Federal Register published February 4, 2022. For questions about this or any other Bankruptcy and Restructuring matter, please contact a Kerr Russell attorney.

About the author:

Jason W. Bank is the chair of the firm’s Bankruptcy and Restructuring Practice Group. He focuses his practice in the areas of commercial bankruptcy, out-of-court workouts, corporate restructuring and creditors’ rights. Jason has successfully guided numerous businesses through out-of-court restructurings and Chapter 11 reorganizations. He has negotiated resolutions of complex financial issues and debtor-creditor disputes and achieved consensual restructurings while avoiding bankruptcy or litigation.

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