As a Naples Bankruptcy Attorney I have dealt with many situations where the property was valued at significantly less than the outstanding mortgages; underwater. In many of those cases the consumer was unable to file a Chapter 13 Bankruptcy as a result of the interpretation of the debt limits rule in our district – this was because often times the mortgage deficiency was added to the other unsecured debts. Many other districts had interpreted the debt limits rule much more liberally allowing many consumers to file a Chapter 13 even if they may have exceeded the debt limits.
As you may remember, Judge Delano recently took the bench in the Fort Myers Bankruptcy Division. After observing her address the debt limits issue and the pending motions to dismiss those cases (where the Debtor exceeded the debt limits), it is apparent that she follows the more liberal and majority interpretation of the debt limits rule. That being said, it appears that for the time being consumer Debtors in the Fort Myers Division will be allowed to present Chapter 13 cases where they may exceed the debt limit. This is not a guarantee that such a Chapter 13 will be confirmed by the Court but it allows consumer Debtors an option that was unavailable for some time. If you have any questions concerning this issue and how it may apply to you please consult your local bankruptcy attorney.