Update: Interest Rates; Debt Limits for Eligibility

WSJ Prime Rate: The WSJ prime rate of interest has increased twice since my last post in May:

• June 15, 2022: 4.75%
• July 27, 2022: 5.50%

In the EDKY, secured claims that have not been specifically provided for in the plan are treated as fully secured with interest at prime plus 2 points. Local Form 3015-1(a), Chapter 13 Plan, Section 3.6.

IRS Interest Rate: The rate of interest payable on secured federal tax claims is 5%, effective July 1, 2022. The rate is adjusted quarterly.

Generally the applicable interest rate to be paid on secured claims through the chapter 13 plan is determined as of the date of confirmation.

Debt Limits for Chapter 13 Eligibility: On June 21, 2022, section 109(e) of the Bankruptcy Code was amended to increase the debt limits for eligibility for chapter 13:

(e) Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated debts of less than $2,750,000 or an individual with regular income and such individual’s spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontingent, liquidated debts that aggregate less than $2,750,000 may be a debtor under chapter 13 of this title.

The new debt limits make no distinction between the amount of secured and unsecured debts. The provision “sunsets” in two years, at which point the debt limits will revert to the amounts in effect before June 21, 2022.