Changes to the Bankruptcy Code Starting April 1, 2022

Every three years, adjustments are made to the figures in the Bankruptcy Code based on changes to the consumer price index during that period. As noted about a year ago when New York State exemptions were updated, the federal bankruptcy exemptions will adjust on April 1, 2022. The debt limits in small business Chapter 11 cases (Subchapter V) and Chapter 13 cases will also be adjusted.

The rising costs of consumer goods over the past three years have taken a toll on Americans. Thankfully, the Bankruptcy Code takes that into account with these adjustments. In short, figures have increased by nearly 11%. These changes only apply to bankruptcy cases filed on or after April 1, 2022.

1. Debt Limit Changes

Small Business Chapter 11

$2,725,625*

$3,024,725

Chapter 13 

$419,275 (unsecured) $1,257,850 (secured)

$465,275 (unsecured) $1,395,875 (secured)

*Not including the debt limit increase that expires this month as part of the CARES Act.

2. Bankruptcy Exemptions Updated

The new exemptions are outlined in the table below. As a reminder, married couples can double the exemption amount if they jointly own an asset. 

 

Before 4/1/2022

Starting 4/1/2022

Homestead (primary residence only)

$25,150

$27,900

Vehicle (1 per debtor)

$4,000

$4,450

Wildcard (if you don’t take homestead exemption)

$1,325 + up to $12,575
of unused homestead ($13,900 maximum wildcard)

$1,475 + up to $13,950
of unused homestead ($15,425 maximum wildcard)

401k/403b/Pension

100%

100%

IRA

$1,362,800

$1,512,350

Jewelry

$1,700

$1,875

Household Goods and clothing

$625 per item, $13,400 total

$700 per item, $14,875 total

Personal Injury

$25,150

$27,900

Life Insurance

$13,400

$14,875

Tools of the Trade

$2,525

$2,800

 

Other notable changes taking effect on April 1, 2022:

  1. Cash advances in excess of $1,100 ($1,000 previously) taken out within 70 days of filing for bankruptcy relief are presumed nondischargeable
  2. Consumer debt in excess of $800 ($725 previously) incurred within 90 days of filing for bankruptcy relief to obtain luxury goods or services is also presumed nondischargeable
  3. For households greater than four, an additional $825 ($750 previously) per person per month is added to the median income for current monthly income calculations (part of the means test).

At Zimmelman Law PLLC, we stay on top of all the latest updates and developments to assist our clients. All of these increases will benefit consumers who are facing financial hardship. If you are struggling to stay afloat, please reach out so we can help you eliminate your debt with dignity.

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Zimmelman Law PLLC

With over ten years of experience, Matthew D. Zimmelman, Esq. has helped thousands become debt-free and saved countless New Yorkers from losing their homes in foreclosure. Whether you are an individual or a small business, looking to file bankruptcy or looking to eliminate your debt without filing bankruptcy, we are here to help you get a fresh start.

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