Sponsors (6)
The bill widens access to faster, less costly bankruptcy options for more small businesses and some middle‑class debtors and clarifies that changes apply to new filings, but it increases risks of reduced creditor recoveries, added administrative load and litigation, and possible court congestion and fairness issues.
Small-business owners with up to $7.5 million in noncontingent liquidated debt can use the faster, lower-cost Subchapter V reorganization process, making restructurings more accessible and affordable.
Individuals (including married filers) with debts under $2.75 million can access Chapter 13 wage‑earner repayment plans, allowing many middle‑class families to restructure debts without liquidation.
Debtors and creditors who file after enactment get clear, prospective application of the new rules so new cases are governed by a single, current statutory framework, reducing retroactive uncertainty.
Creditors (and ultimately consumers and taxpayers) may face reduced recoveries because higher eligibility caps let larger debtors use reorganizations that can cut creditor recoveries.
Bankruptcy courts could face greater caseload complexity and a rush of filings around enactment as parties try to time filings, producing administrative strain, slower proceedings, and fairness concerns.
Debtors and creditors in ongoing cases keep the old rules, creating potentially uneven outcomes between similar cases filed before and after enactment.
Based on analysis of 3 sections of legislative text.
Raises Subchapter V small-business debt cap to $7.5M and Chapter 13 individual cap to $2.75M, expanding eligibility for those bankruptcy chapters.
Raises the debt limits that let businesses and individuals use two specific bankruptcy pathways. The bill increases the maximum eligible debt for small-business Subchapter V reorganizations to $7,500,000 and raises the Chapter 13 individual debt cap to $2,750,000, and makes those increases apply to cases filed on or after enactment. The changes expand eligibility for simplified reorganization procedures for more small businesses and allow more higher‑debt individual filers to seek Chapter 13 repayment plans rather than other bankruptcy chapters.
Official title: Bankruptcy Threshold Adjustment Act of 2026
Introduced March 3, 2026 by Charles Ernest Grassley · Last progress August 10, 2026