What is the Chapter 13 unsecured debt limit and what happens if a debtor exceeds it?

Short Answer

In South Carolina, the current Chapter 13 unsecured-debt limit is less than $526,700, measured as of the petition date. The limit is federal and applies in South Carolina just as it does nationwide.[4][5] A debtor whose qualifying unsecured debt is at or above that amount generally cannot remain in Chapter 13; the debtor should evaluate Chapter 11, including Subchapter V if the debtor qualifies as a small-business debtor, or address whether a debt is properly characterized as contingent, unliquidated, secured, or otherwise excluded from the calculation.

Chapter 13 Unsecured-Debt Limit

The governing statute provides:

“Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $526,700 and noncontingent, liquidated, secured debts of less than $1,580,125 ... may be a debtor under chapter 13.”[5]

Accordingly, as of April 1, 2025, the applicable limits are:

The Judicial Conference adjusts these amounts every three years under 11 U.S.C. § 104. The current figures became effective April 1, 2025.[5][6]

The United States Courts identifies the same current limits for Chapter 13 eligibility.[4]

What Debt Counts

The relevant question is not simply the debtor’s total debt. Section 109(e) focuses on whether the debt is:

• Unsecured
• Noncontingent
• Liquidated
• Owed as of the petition date

Noncontingent debt

A debt is generally noncontingent when liability does not depend on a future event. For example, an ordinary credit-card balance or completed loan obligation is ordinarily noncontingent. A guaranty obligation may be contingent if the primary obligor has not defaulted or another condition to liability has not occurred.

Liquidated debt

A debt is generally liquidated when its amount is fixed or readily ascertainable by mathematical calculation. A debt need not be undisputed to be liquidated. A disputed debt may still count if its amount can be readily determined.

Secured debt

A debt secured by collateral is generally counted as secured to the extent of the collateral’s value and unsecured to the extent the debt exceeds that value. The valuation and classification of a partially secured claim can therefore affect Chapter 13 eligibility.

If the Debtor Is Over the Limit

1. The debtor cannot ordinarily solve the eligibility problem through the Chapter 13 plan

A debtor generally cannot file Chapter 13 with qualifying unsecured debt of $526,700 or more and then use plan payments to reduce the debt below the statutory threshold. Eligibility is ordinarily determined based on the debtor’s debts as of the petition date.

The practical options are:

• Do not file Chapter 13 if the debtor clearly exceeds the limit.
• Challenge the creditor’s calculation if the debt is contingent, unliquidated, secured, or incorrectly valued.
• File under Chapter 11 if the debtor is eligible and Chapter 11 is economically feasible.
• Consider Subchapter V of Chapter 11 if the debtor is a qualifying small-business debtor and satisfies the applicable debt ceiling and other requirements.
• Reduce or restructure debt before filing, where legally and practically possible, but without transfers or transactions designed to manufacture eligibility or conceal assets or liabilities.

2. A pending Chapter 13 case may be dismissed or converted

If the debtor is ineligible because qualifying debt exceeds the statutory limit, a creditor or the trustee may raise the issue. The court may dismiss the case, and the debtor may seek conversion to another eligible chapter if appropriate.

The debtor should not assume that a filed Chapter 13 case will remain viable merely because no creditor immediately objects. Eligibility can be challenged through a motion to dismiss or other contested proceeding, and inaccurate schedules can create additional consequences.

3. Chapter 11 may provide the principal alternative

An individual with debt exceeding the Chapter 13 limits may be eligible for ordinary Chapter 11. Chapter 11 can permit a restructuring of secured and unsecured obligations, but it is generally more expensive and procedurally demanding than Chapter 13.

A business debtor may also consider Subchapter V. The temporary $7.5 million Subchapter V debt ceiling expired on June 21, 2024.[1][2] The sources found for this issue report that, after the sunset, the Subchapter V eligibility limit reverted to the small-business-debtor framework under 11 U.S.C. § 101(51D), with the then-effective ceiling of $3,024,725.[1][3] Because the statute provides for periodic adjustments, the applicable Subchapter V amount should be verified as of the proposed petition date under 11 U.S.C. § 1182(1) and 11 U.S.C. § 104.

Practical Eligibility Analysis

Before deciding that the debtor is over the limit, counsel should prepare an eligibility schedule containing:

1. Each creditor and claim amount.
2. Whether the claim is secured, unsecured, or partially secured.
3. Whether liability is contingent.
4. Whether the amount is liquidated or readily ascertainable.
5. The petition-date balance, rather than merely the amount shown on a recent statement.
6. Any jointly held or spousal debt, because the statute addresses aggregate debt for a debtor and spouse filing together.
7. Any disputed claim and the basis for excluding or including it.
8. Any pending litigation, guaranty, tax, or tort claim that may affect classification.

The key distinction is between a debt that is merely disputed and one that is genuinely contingent or unliquidated. A dispute alone does not necessarily remove a claim from the Chapter 13 eligibility calculation.

Bottom Line

For a South Carolina Chapter 13 case filed on or after April 1, 2025, the debtor must have less than $526,700 in noncontingent, liquidated unsecured debt, in addition to satisfying the separate secured-debt limit.[4][5] If the debtor is at or above that amount, the debtor should not rely on a Chapter 13 repayment plan to cure the problem. The appropriate course is to verify the classification and amount of each claim and then evaluate Chapter 11, potentially Subchapter V, or another restructuring strategy.