Congress has returned from recess and the Senate is expected to consider an amendment that would significantly expand Chapter 13 eligibility. The proposal would replace the existing split limits of approximately $1.58 million in secured debt and $526,000 in unsecured debt with a single ceiling of $2.75 million.

This change would matter most in high cost jurisdictions such as New York and California, where mortgage balances frequently exceed the current caps. It would also benefit debtors carrying large student loan or medical obligations, as well as individuals who personally guaranteed SBA loans during the pandemic.

Without access to Chapter 13, many debtors are forced into Chapter 11, which is prohibitively expensive, or Chapter 7, which does not protect assets like a family home. Practitioners note that the current limits are outdated and prevent wage earners and small business owners from obtaining meaningful relief.

The bipartisan amendment, introduced by Senators Chuck Grassley and Dick Durbin, would be retroactive to cover cases filed after the temporary pandemic era increase expired in June 2024. If adopted, the higher limits would restore Chapter 13 as a practical path for families and small businesses seeking to restructure debt while preserving assets.