Every three years on April 1, the dollar amounts in the Bankruptcy Code are adjusted to account for inflation. The April 1, 2025, increase will be approximately 13.2%, even larger than the nearly 11% increase three years ago.
Bankruptcy Code section 104 requires the Judicial Conference of the United States to publish the changes at least a month before they take effect. On February 4, 2025, the Judicial Conference published this year’s increase in the Federal Register.[1] The planned 13.2% increase in statutory dollar limits will affect nearly everything in bankruptcy that has a dollar limit, including
- the amount of property that a debtor may exempt from the estate,
- the maximum amount of certain “priority” claims, such as for employee wages and for deposits for certain undelivered products and services,
- the minimum aggregate claims needed to file an involuntary bankruptcy petition, and
- the aggregate debt limits used to determine which debtors qualify to file cases under chapter 13 or subchapter V of chapter 11.
Anyone who relies on specific dollar limits in the Bankruptcy Code should note these changes.
Note, subchapter V of chapter 11 previously had a debt limit of $7,500,000, but as we reported earlier, this debt limit reverted on Friday, June 21, 2024, to $3,024,725. The subchapter V debt limit will rise to $3,424,000 on April 1, 2025, as part of this triennial adjustment.
Michigan has dollar limits for its own set of state-specific bankruptcy exemptions, and its dollar limits increase every three years as well. They increase on a different three-year cycle, though. They were last increased March 1, 2023, and are not set to increase again until 2026.
[1] Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases, 90 FR 8941-01.
