When filing for bankruptcy in Memphis, there are a number of important considerations you’ll need to make. However, one issue that is often overlooked is whether or not there is a limit to how much debt you can have when filing. The answer depends on the type of bankruptcy filed, so understanding these limits prior to filing is critical to avoid unnecessary delays or denials. The following blog explores these debt limits and tips to help you calculate your debt. In addition, you’ll learn the importance of working with a Shelby County, TN bankruptcy lawyer to help you navigate these complicated legal matters.
What Are the Debt Limits for Bankruptcy in Tennessee?
It’s important to understand that there are no maximum debt limits to file Chapter 7 bankruptcy in Tennessee. However, there is an income limit. As such, to pass the means test in Tennessee, you’ll need to ensure that your annual income is less than the average for other households of your size in the state. This means you can have two million dollars in debt, and as long as your income is less than the average of other similarly sized families, you will be eligible to pursue bankruptcy.
Chapter 13, on the other hand, has much stricter debt limits for potential filers. This is because this chapter is reserved for those with manageable debts who can make payments over the course of three to five years. As such, if your debt exceeds the limits in place, it will become too complex. If this is the case, you would need to determine if you meet the income requirements to file Chapter 7 or file Chapter 11 bankruptcy.
As of April 2025, the national debt limits for Chapter 13 bankruptcy are as follows:
- Unsecured debts, like credit cards or medical bills: $526,700
- Secured debts, like mortgages and auto loans: $1,580,125
It’s imperative to note that the bankruptcy debt limits are updated every three years. As such, the next time these numbers change will be April 1, 2028
How Do I Calculate My Debt?
Before filing for bankruptcy, calculating the total debt you are in can help you determine the best chapter for your circumstances. However, it’s important to familiarize yourself with the most common errors made by filers looking to calculate the total debt they are in. Unfortunately, making errors can result in inaccurate filings that lead to delays or denials in your claim, ultimately pushing you even further away from financial freedom.
The most important thing you can do is ensure that you list all debts. Though this may seem obvious, many filers often forget to include personal loans from friends and family members or payday loans. This is also often the case for debts that are being disputed. Regardless of the circumstances, if you owe money, you must include it. Doing so allows you the opportunity to prepare for this process.
It’s also important to ensure you properly classify each debt. Failure to properly classify a debt can result in disqualification for Chapter 13 filers.
Filing for bankruptcy can be an incredibly overwhelming matter, especially when you already feel as though you are drowning in debt. As such, it is in your best interest to connect with an experienced bankruptcy attorney with the Arnold Law Firm to discuss your legal options. Our team understands that this is a difficult process, which is why we are committed to helping you reap the full benefits of filing so you can regain control of your financial situation. When you need help, don’t hesitate to contact us today.
