Today marks a turning point for thousands of families drowning in debt. President Trump just signed H.R. 7730 into law, significantly raising the debt limits for Chapter 13 bankruptcy for the first time in years. This change opens the door to relief for people who previously had no good options—those caught in the frustrating gap between Chapter 13’s old limits and the crushing expense of individual Chapter 11. The people caught most often in this are highly educated professionals with lots of student loans and big mortgages like doctors.
Chapter 7 does not have these debt limits and has always been available to anyone making less than the median income for a family of their size in the state where they live. These limits only really affected high earners with substantial debt.
If you’re facing overwhelming debt but thought bankruptcy wasn’t an option because you owed too much, this new law changes everything. Let’s break down what just happened and why it matters for families across Minnesota and North Dakota.
What Changed With H.R. 7730?
The new law dramatically increases the debt thresholds for Chapter 13 bankruptcy eligibility. Under the old rules, you could only file Chapter 13 if your unsecured debts (like credit cards and medical bills) were under $465,275 and your secured debts (like mortgages and car loans) were under $1,395,875.
Those numbers just went up—significantly. The new limits are:
- Unsecured debt: Up to $2,750,000
- Secured debt: Up to $2,750,000
This is the best news many debt-burdened families have received in years. It means that homeowners with substantial mortgage debt, small business owners who personally guaranteed loans, or anyone who’s accumulated significant medical and credit card debt now has access to the best debt reorganization tool available: Chapter 13.
Why This Is the Best Path Forward for Many Families
Before today, if your debts exceeded the old Chapter 13 limits and your income was too high for a Chapter 7, then your only bankruptcy option was individual Chapter 11. And here’s the problem: Chapter 11 is incredibly expensive and complex. It’s designed for large businesses and wealthy individuals, requiring extensive legal fees, detailed financial disclosures, and quarterly reports to the court. Most families simply can’t afford it—the best-case scenario often meant legal fees starting at $15,000 or more.
Chapter 13, by contrast, is the best fit for regular working people. It’s streamlined, affordable, and built specifically for individuals and families who want to reorganize their debts while keeping their homes and cars. You propose a 3-to-5-year payment plan based on what you can actually afford, and at the end, most remaining unsecured debt gets wiped out completely.
Real-World Impact: Who Benefits Most?
This law helps real people in impossible situations. Consider these examples we see regularly in Minnesota and North Dakota:
The Homeowner: Sarah owns a home in Fargo worth $400,000, but she’s fallen behind on her mortgage and owes $380,000 on it. She also has $150,000 in medical debt from her husband’s cancer treatment and $80,000 in credit card debt she used to cover living expenses during his illness. Under the old rules, her total debt exceeded the limits. Her best option was losing her home or attempting an impossibly expensive Chapter 11 filing. Now? Chapter 13 is her best path to save her home and get back on track.
The Small Business Owner: Tom guaranteed a business loan that went south during the pandemic. He owes $600,000 on that loan personally, plus has a $350,000 mortgage and $100,000 in credit card debt. The old debt limits shut him out of Chapter 13 entirely. Today’s law gives him access to the best tool for reorganizing these debts without the astronomical cost of Chapter 11.
How Chapter 13 Works—And Why It’s the Best Option
Chapter 13 is sometimes called a “wage earner’s plan” because it’s designed for people with regular income who want to pay back what they can while protecting their property. Here’s why it’s often the best choice:
You Keep Your Assets: Unlike Chapter 7, which might require selling non-exempt property, Chapter 13 lets you keep your home, car, and other assets as long as you follow your payment plan. For families in Minnesota and North Dakota facing foreclosure, this is often the best—and only—way to save their homes.
Automatic Stay Protection: The moment you file, creditors must stop all collection actions. Wage garnishments stop. Foreclosure proceedings halt. This immediate protection gives you breathing room to reorganize.
Affordable Legal Fees: Chapter 13 attorney fees are typically paid through your plan, making it accessible even when money is tight. Compare this to Chapter 11, where you need thousands upfront just to get started.
Flexible Payment Plans: Your plan is based on your actual income and necessary expenses. The court wants you to succeed, not fail.
For a detailed comparison of your options, our guide on Chapter 7 vs. Chapter 13 bankruptcy in Minnesota explains how each works and which might be your best fit depending on your specific situation.
What Debts Can You Handle in Chapter 13?
Chapter 13 is particularly effective at dealing with:
- Mortgage arrears: Catch up on back payments over 3-5 years while stopping foreclosure
- Car loans: Sometimes reduce the principal owed or interest rate
- Medical debt: Often discharged completely at the end of your plan
- Credit card debt: Typically discharged after plan completion
- Tax debt: Older tax obligations can be managed through your plan
- Personal loans: Generally discharged at plan completion
Understanding what debts can be discharged in Minnesota bankruptcy helps you see the full picture of how this relief works in practice.
Minnesota and North Dakota: Local Considerations
While bankruptcy is federal law, local court procedures vary. Filing bankruptcy in Fargo involves specific timelines and local rules that affect your case. Working with attorneys who know these local courts is the best way to ensure your case goes smoothly.
In our experience serving families across both states for over 40 years, we’ve seen how the best outcomes come from understanding not just federal bankruptcy law but also how local trustees and judges handle cases in your specific courthouse.
Taking the Next Step
If you’ve been struggling under debt that exceeded the old Chapter 13 limits, today brings new hope. This law isn’t just a technical change—it’s a lifeline for families who thought they were out of options.
Bankruptcy isn’t about giving up. It’s about taking control of your financial future with the best legal tools available. It’s a fresh start, a chance to reorganize, and a path toward stability.
The best time to explore your options is before things get worse. If creditors are calling, if foreclosure notices are arriving, if you’re juggling which bills to pay each month—you don’t have to face this alone.
At Walker & Walker Law Offices, we’ve spent four decades helping Minnesota and North Dakota families find their way through financial crisis to solid ground. We know bankruptcy law inside and out, and we know the best strategies for your unique situation. This new law means we can help even more families access the relief they need and deserve.
Your financial fresh start is closer than you think. And now, with these expanded debt limits, it’s more accessible than ever before.