Sponsors (7)
The bill widens access to streamlined and consumer bankruptcy reorganizations—helping more small businesses and middle‑class debtors avoid liquidation and preserve jobs—at the cost of greater uncertainty and potential losses for unsecured creditors, added burdens and delays for courts, and transitional fairness/timing issues for pending cases.
Small-business owners with up to $7.5 million of noncontingent, liquidated debt gain access to streamlined Subchapter V Chapter 11 relief, making it easier to restructure instead of liquidate and helping preserve jobs and ongoing businesses.
Individuals and married couples with regular income and debts under $2.75 million can use Chapter 13 to reorganize and keep assets while repaying creditors, expanding access to an alternative to liquidation for middle‑class households.
Clarifying exclusions for SEC-reporting companies and their affiliates reduces gaming of 'small-business' status and better targets streamlined relief to true small businesses, improving fairness and limiting misuse.
Unsecured creditors (including some individual creditors and financial institutions) are likely to bear more losses and face greater uncertainty in recoveries because higher debt ceilings shift more claims into reorganizations rather than liquidations.
Expanding eligibility and increasing filings could raise bankruptcy court caseloads and administrative burdens, producing delays and slower access to relief for filers.
Debtors and creditors in ongoing cases filed before enactment may receive different treatment than future filers, creating a two-tier system that raises fairness and legal-equality concerns.
Based on analysis of 6 sections of legislative text.
Raises small-business debt cap to $7.5M and Chapter 13 consumer cap to under $2.75M, with exclusions for large affiliates and public-reporting corporations.
Official title: To amend title 11, United States Code, to modify certain bankruptcy eligibility requirements, and for other purposes.
Introduced February 26, 2026 by Benjamin Cline · Last progress February 26, 2026
Raises the dollar limits that determine who can use certain bankruptcy chapters. The bill increases the small-business debtor cap to $7.5 million for business-related debts (with at least half arising from commercial activity) and raises the Chapter 13 consumer debt eligibility ceiling to under $2.75 million for individuals (or individuals and spouse) with regular income. The changes apply only to bankruptcy cases filed on or after the law’s enactment.