8 October 2026
/ Geoffrey J. Peters
Congress Moves to Raise Bankruptcy Debt Limits: What Creditors Should Know
Congress recently passed the Bankruptcy Threshold Adjustment Act of 2026. The bill will be sent to President Trump for his approval. Two of the provisions within the Act are particularly important to bankruptcy cases.
First, the legislation increases the debt limit in Subchapter V cases. Congress enacted subchapter V of chapter 11 in the Bankruptcy Code on February 19, 2020 as part of the Small Business Reorganization Act of 2019 (SBRA). Subchapter V had an initial debt limit of $2,725,625 that was temporarily increased to $7,500,000 until June 21, 2024. The debt limit is currently $3,424,00. The legislation proposes to increase the debt limit back to $7,500,000.
Subchapter V allows small businesses to reorganize under the bankruptcy code. Subchapter V has debtor-friendly provisions including accelerated timelines for cases. It also enables a faster and less expensive restructuring process with fewer procedural hurdles and reduced administrative costs. The legislation will allow more businesses to take advantage of these provisions and file under Subchapter V.
Second, the legislation increases the debt limitation for chapter 13 cases. Currently, an individual with regular income is eligible for chapter 13 as long as their secured debt does not exceed $1,580,125 and its unsecured debt does not exceed $526,700. The legislation increases the debt limit to a single $2,750,000 debt limit, without regard to secured or unsecured.
These new provisions will apply to bankruptcy cases filed on or after the effective date of the legislation. Our team is constantly monitoring changes within the industry. If you have questions on this topic or would like to learn more about Weltman’s Recovery Solutions, feel free to connect with Columbus, OH Shareholder Geoffrey Peters at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
First, the legislation increases the debt limit in Subchapter V cases. Congress enacted subchapter V of chapter 11 in the Bankruptcy Code on February 19, 2020 as part of the Small Business Reorganization Act of 2019 (SBRA). Subchapter V had an initial debt limit of $2,725,625 that was temporarily increased to $7,500,000 until June 21, 2024. The debt limit is currently $3,424,00. The legislation proposes to increase the debt limit back to $7,500,000.
Subchapter V allows small businesses to reorganize under the bankruptcy code. Subchapter V has debtor-friendly provisions including accelerated timelines for cases. It also enables a faster and less expensive restructuring process with fewer procedural hurdles and reduced administrative costs. The legislation will allow more businesses to take advantage of these provisions and file under Subchapter V.
Second, the legislation increases the debt limitation for chapter 13 cases. Currently, an individual with regular income is eligible for chapter 13 as long as their secured debt does not exceed $1,580,125 and its unsecured debt does not exceed $526,700. The legislation increases the debt limit to a single $2,750,000 debt limit, without regard to secured or unsecured.
These new provisions will apply to bankruptcy cases filed on or after the effective date of the legislation. Our team is constantly monitoring changes within the industry. If you have questions on this topic or would like to learn more about Weltman’s Recovery Solutions, feel free to connect with Columbus, OH Shareholder Geoffrey Peters at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
