Bankruptcy Threshold Adjustment Act of 2026

This bill would restore higher debt eligibility limits for small business and individual bankruptcies that previously expired in 2024. It proposes increasing the debt limit for small business reorganizations under Subchapter V to $7.5 million and raising the cumulative debt limit for Chapter 13 wage earner plans to $2.75 million. Additionally, the legislation would apply both secured and unsecured debt toward a single Chapter 13 limit rather than maintaining separate thresholds for each debt type.

This bill affects small businesses seeking reorganization under Subchapter V by increasing the eligible debt limit from approximately $3.4 million to $7.5 million. It also impacts individual wage earners filing for Chapter 13 bankruptcy by raising the cumulative debt limit to $2.75 million and changing how secured and unsecured debts are calculated toward that limit.

• Subchapter V small business debt limit increase. The bill raises the debt limit for small business reorganizations under Subchapter V from approximately $3.4 million to $7.5 million.
• Chapter 13 cumulative debt limit increase. The legislation increases the total debt limit for individuals filing under Chapter 13 from approximately $2.1 million to $2.75 million.
• Consolidation of Chapter 13 debt categories. The bill modifies Chapter 13 eligibility by applying both secured and unsecured debt toward a single cumulative limit, rather than maintaining separate limits for each debt type.
• Restoration of expired bankruptcy provisions. The measure reinstates specific debt limit changes for small business and wage earner bankruptcies that had previously expired in 2024.

The bill restores and modifies debt limit provisions for Subchapter V and Chapter 13 bankruptcies that previously expired in 2024. It adjusts existing eligibility thresholds for small business reorganizations and wage earner plans, while also changing how secured and unsecured debts are calculated toward Chapter 13 limits.

The bill aims to restore expired debt limits for small business and individual bankruptcy filings by increasing the eligibility thresholds for Subchapter V and Chapter 13 reorganizations. It also seeks to simplify Chapter 13 eligibility by applying a single cumulative limit to both secured and unsecured debt.