Debtor Eligibility for Subchapter V and Chapter 13 Expected to Rise

Short summary

The Bankruptcy Threshold Adjustment Act of 2026 (S. 3977/H.R. 7730) would permanently restore higher debt ceilings from the Covid era, increasing Subchapter V limits from $3.4M to $7.5M and consolidating Chapter 13 to $2.75M combined. With bipartisan support, the bill would expand reorganization options for small businesses and higher-income debtors. Subchapter V filings rose 11% under current limits, signaling strong demand for cost-effective bankruptcy alternatives.

• •Subchapter V debt limits would increase from $3.4M to $7.5M for small business reorganizations
• •Chapter 13 limits consolidate and increase to $2.75M, removing the secured/unsecured debt distinction
• •Bill has bipartisan support and applies retroactively to cases filed after June 21, 2024

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