The "Bankruptcy Threshold Adjustment Act" modifies the debt limits for small business bankruptcies under the title 11 of the United States Code. It raises the debt limit for a person engaged in commercial or business activities to $7,500,000, excluding debts owed to affiliates or insiders, with at least 50 percent of the debts arising from the commercial or business activities. These changes will apply to cases commenced under title 11 on or after the bill's enactment.
Bankruptcy Threshold Adjustment Act of 2026
This bill restores changes that expired in 2024 applicable to debt limits for Subchapter V (small business reorganization) and Chapter 13 (the wage earner's plan) bankruptcies.
Specifically, the bill increases the debt limit under Subchapter V from approximately $3.4 million to $7.5 million and increases the cumulative debt limit under Chapter 13 from approximately $2.1 million to $2.75 million.
The bill also applies both secured and unsecured debt towards the Chapter 13 limit. (Currently, separate limits apply to secured and unsecured debt under Chapter 13 bankruptcy.)