Bankruptcy Threshold Adjustment Act of 2026
Sponsored By: Representative Cline
In Committee
Summary
This bill would increase the dollar cutoffs that let people and small businesses use Chapters 11 and 13. Raises bankruptcy eligibility thresholds.
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- Consumers and families: Individuals with regular income, or a married couple, could use Chapter 13 if their noncontingent, liquidated debts total less than $2.75 million, with stockbrokers and commodity brokers excluded.
- Small businesses: A person engaged in commercial or business activities could qualify as a small business debtor for Chapter 11 if aggregate noncontingent, liquidated secured and unsecured debts are $7.5 million or less and at least 50 percent of those debts come from business activities.
- Scope and exclusions: The bill excludes debtors in affiliated groups whose combined noncontingent liquidated debts exceed $7.5 million and corporations that must file reports under the Securities Exchange Act or their affiliates. The changes would apply to cases begun on or after enactment.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 2 benefits, 0 costs, 1 mixed.
Higher Chapter 13 debt limit
This bill would raise the Chapter 13 debt ceiling to $2,750,000. You would be able to file for Chapter 13 if your noncontingent, liquidated debts are under $2,750,000 and you have regular income. If you file jointly, this counts both spouses unless the spouse is a stockbroker or commodity broker. Debts are measured on the petition filing date and must be noncontingent and liquidated.
Higher small business debt limit
This bill would raise the small-business debtor debt ceiling to $7,500,000. A person engaged in business could qualify if their noncontingent, liquidated secured and unsecured debts are $7,500,000 or less after excluding debts owed to affiliates or insiders and if at least 50% of debts arose from business activity. It would not apply to public companies, affiliates of public companies, or businesses whose main activity is owning single asset real estate.
New bankruptcy rules for future filings
The bill would make its changes apply only to bankruptcy cases filed on or after the date of enactment. It would not change cases filed before that date. This is a timing rule, not a change in dollar amounts.
Sponsors & CoSponsors
Sponsor
Cline
VA • R
Cosponsors
Correa
CA • D
Sponsored 2/26/2026
Lee (FL)
FL • R
Sponsored 2/26/2026
Neguse
CO • D
Sponsored 2/26/2026
Gooden
TX • R
Sponsored 3/24/2026
Lofgren
CA • D
Sponsored 3/25/2026
Roll Call Votes
No roll call votes available for this bill.
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