Sponsors (6)
The bill expands access to reorganization and creates clearer rules for future bankruptcy filings—helping more businesses and some higher‑debt individuals avoid liquidation—while excluding pending cases and risking higher costs, increased complexity, and potential upward pressure on borrowing costs.
Small-business owners with noncontingent liquidated debt up to $7.5 million can use a streamlined small-business Chapter 11 process to try to reorganize rather than liquidate, increasing the chance of preserving businesses and jobs.
Individuals (including married couples filing jointly) with regular income and noncontingent liquidated debt below $2.75 million can seek Chapter 13 repayment plans instead of Chapter 7 liquidation, enabling repayment-focused relief and greater retention of assets.
New bankruptcy cases filed after enactment will be governed by a single, updated set of rules, reducing retroactivity disputes and giving courts, creditors, filers, and government actors clearer, more predictable guidance.
Raising eligibility limits for reorganization may reduce creditor recoveries and, over time, increase borrowing costs for consumers and businesses, which can raise financial burdens for borrowers and taxpayers.
People with cases pending at enactment are excluded from the new rules, leaving some mid‑case debtors without the revised relief and producing potentially inequitable outcomes and prolonged uncertainty for those filers.
Expanded Chapter 11 reorganizations can be more complex and costly, potentially delaying creditor recoveries and increasing administrative expenses that are ultimately borne by stakeholders.
Based on analysis of 3 sections of legislative text.
Raises eligibility limits: small-business Subchapter V ceiling to $7.5M and Chapter 13 consumer debt cap to $2.75M, preserving existing exclusions.
Introduced March 3, 2026 by Charles Ernest Grassley · Last progress March 3, 2026
Raises the debt-size limits that determine who can use two streamlined bankruptcy options. The bill increases the small-business debtor ceiling used for Subchapter V (a simplified Chapter 11 process) to $7.5 million and raises the Chapter 13 consumer debt cap to $2.75 million, while keeping existing exclusions for public-reporting companies, affiliates/insiders, stockbrokers, and commodity brokers. The new limits apply only to bankruptcy cases filed on or after the law takes effect.