5 versions

CosmeticWhat changed in ENROLLED BILLcompared with REPORTED IN HOUSE (Aug 27, 2026)

Technical corrections only. The changes between v2 and v5 consist of updates to legislative metadata and formatting as the bill progressed to its enrolled version. No substantive policy changes were made to the text of the bill.

Skipping v3 (ENGROSSED IN HOUSE) and v4 (RECEIVED IN SENATE). Those versions changed too little to need their own analysis, so they reuse REPORTED IN HOUSE's. Changes are measured from the most recent version analyzed on its own.

H.R. 7730119th CongressIntroduced Feb 26, 2026

Bankruptcy Threshold Adjustment Act

Passed SenateFinance and Financial SectorSubstantive

View bill text

Sponsor: Rep. Cline, Ben [R-VA-6]
Committees: Judiciary Committee (primary)
Last action: Oct 14, 2026

This analysis was written for v2 (REPORTED IN HOUSE, Aug 27, 2026). ENROLLED BILL changed too little to need its own, so it reuses that one rather than a rewrite. The differences between the two are summarized above. View v2

Bottom line

This bill significantly expands eligibility for streamlined bankruptcy processes for small businesses and individuals by raising the maximum debt thresholds, aiming to provide more accessible paths to financial reorganization.

What it actually does

This bill amends Title 11 of the United States Code (the Bankruptcy Code) to significantly increase the debt limits for eligibility under two key bankruptcy chapters: Subchapter V of Chapter 11, which provides a streamlined reorganization process for small businesses, and Chapter 13, which allows individuals with regular income to reorganize their debts. Specifically, it raises the small business debt limit to $7,500,000 and the consumer debt limit to $2,750,000, making these higher thresholds permanent.

Proponents argue

Supporters argue that these increased limits reflect current economic realities, inflation, and the rising costs of doing business and living, which have rendered previous limits obsolete. They contend that the bill will allow more struggling small businesses to reorganize efficiently under Subchapter V, preserving jobs and economic activity, and enable more individuals to access the more manageable Chapter 13 repayment plans, preventing asset liquidations and providing a structured path to financial recovery.

Opponents contend

Opponents might argue that raising debt limits could encourage excessive borrowing or make it harder for creditors to recover debts, potentially increasing lending risks and costs across the economy. They might also suggest that allowing larger or more complex cases into these streamlined bankruptcy chapters could strain the courts or lead to less thorough oversight compared to traditional, more rigorous bankruptcy proceedings.

The bill is very concise and clearly structured, making its core changes easy to understand for any informed reader within a short timeframe.

Section 2(a), amending Section 1182(1) of title 11, United States Code

Modification to the Small Business Bankruptcy Debt Limit

prominently featuredmoderately complex

This provision permanently raises the maximum aggregate noncontingent liquidated secured and unsecured debt a small business can have to be eligible for Subchapter V of Chapter 11 bankruptcy to $7,500,000. This limit excludes debts owed to affiliates or insiders and requires at least 50 percent of the debts to originate from the debtor's commercial or business activities. It also clarifies that publicly traded corporations and their affiliates are excluded from this eligibility.

GroupImpactMechanismScale

GroupSmall businesses with debts between the previous limit and $7.5 millionImpactGain eligibility for the more streamlined and cost-effective Subchapter V bankruptcy process, potentially allowing them to reorganize and continue operations rather than liquidate.MechanismDirect amendment to Title 11, Section 1182(1), expanding the definition of 'debtor' for Subchapter V.ScalePotentially thousands of small businesses annually, impacting local economies and employment.

GroupCreditors of small businessesImpactMay face different recovery outcomes under Subchapter V compared to traditional Chapter 11, potentially faster resolution but with specific plan requirements.MechanismChanges the legal framework governing small business reorganizations, influencing the negotiation and approval of repayment plans.ScaleBroad impact on commercial lending and debt recovery practices.

Supporters argue

Supporters argue that making the $7.5 million debt limit permanent for Subchapter V ensures that more struggling small businesses can access this efficient path to reorganization, which has proven effective in preserving jobs and local economies. They contend that this adjustment is crucial for reflecting current economic realities and inflation.

Critics contend

Some critics might argue that a higher debt limit could allow larger, more complex businesses to utilize a system primarily designed for smaller entities, potentially straining court resources or leading to less scrutiny than traditional Chapter 11 proceedings.

Tradeoffs

The provision balances the desire to provide efficient and accessible relief to a wider range of small businesses against potential concerns regarding the complexity of cases handled under a streamlined process and its implications for creditor recoveries.

Section 2(b), amending Section 109(e) of title 11, United States Code

Modification to the Consumer Bankruptcy Debt Limit

prominently featuredstraightforward

This provision permanently raises the maximum aggregate noncontingent liquidated debts an individual (or an individual and their spouse) can have to be eligible for Chapter 13 bankruptcy to $2,750,000. Chapter 13 allows individuals with regular income to reorganize their debts through a court-approved repayment plan over three to five years, thereby avoiding the liquidation of their assets.

About this analysis. AI-Generated from the official bill text and available committee reports. Gaps in available data are noted explicitly. Verify important details with the official Congress.gov record.