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S3977119th CongressWALLET

Bankruptcy Threshold Adjustment Act of 2026

Sponsored By: Senator Sen. Grassley, Chuck [R-IA]

In Committee

Summary

Adjusting bankruptcy eligibility by changing debt thresholds for small businesses and individuals. It would reshape who can use Chapter 11 and Chapter 13 by changing the debt caps and some eligibility rules.

Show full summary
  • Small business debtors: Would redefine who counts as a debtor under Chapter 11 so a person engaged in business with aggregate noncontingent, liquidated secured and unsecured debts up to $7.5 million could qualify. At least 50 percent of those debts must come from the debtor's commercial or business activities. The bill excludes any affiliated group whose aggregate debts exceed $7.5 million excluding affiliate or insider debts. It also excludes corporations that must file public reports under the Securities Exchange Act and their affiliates.
  • Consumer debtors: Would set Chapter 13 eligibility to individuals with regular income who owe less than $2.75 million in noncontingent, liquidated debts. The same $2.75 million cap applies to a filer and a spouse filing together. Stockbrokers and commodity brokers are treated under the same dollar test.
  • Scope: The changes would apply to cases commenced under title 11 on or after enactment.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 0 benefits, 1 costs, 1 mixed.

New $2.75M Chapter 13 limit

If enacted, you would only be eligible for Chapter 13 if you are an individual with regular income and on the filing date you owe less than $2.75 million in noncontingent, liquidated debts. For joint filers, you and your spouse's debts would be counted together against the $2.75 million limit. Stockbrokers and commodity brokers would not be allowed to use Chapter 13 under this rule. These rules would apply to cases filed on or after the date of enactment.

Higher Chapter 11 small business cap

If enacted, a person engaged in business could qualify as a small-business Chapter 11 debtor if, on the filing date or order for relief, their aggregate noncontingent, liquidated secured and unsecured debts (minus debts owed to affiliates or insiders) are $7.5 million or less. At least 50 percent of those debts would have to have arisen from the person's commercial or business activities. The rule would exclude corporations that must report under section 13 or 15(d) of the Securities Exchange Act, affiliates of those reporting corporations, members of affiliated groups whose group's debts exceed $7.5 million (after the same affiliate-insider exclusion), and persons whose primary activity is owning single-asset real estate. These changes would apply to cases filed on or after the date of enactment.

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Sponsors & CoSponsors

Sponsor

Sen. Grassley, Chuck [R-IA]

IA • R

Cosponsors

  • Sen. Durbin, Richard J. [D-IL]

    IL • D

    Sponsored 3/3/2026

  • Sen. Cornyn, John [R-TX]

    TX • R

    Sponsored 3/3/2026

  • Sen. Whitehouse, Sheldon [D-RI]

    RI • D

    Sponsored 3/3/2026

  • Sen. Graham, Lindsey [R-SC]

    SC • R

    Sponsored 3/3/2026

  • Sen. Coons, Christopher A. [D-DE]

    DE • D

    Sponsored 3/3/2026

Roll Call Votes

No roll call votes available for this bill.

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