The bill aims to adjust the debt limits for small business and consumer bankruptcies, increasing the small business limit to $7,500,000 and the consumer limit to $2,750,000. This applies to cases initiated under title 11 of the United States Code after the bill's enactment. The changes would allow more small businesses and individuals with regular income to file for bankruptcy protection. If passed, this bill may provide financial relief to a wider range of small businesses and individuals facing bankruptcy.
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.)
