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117-s-3823117th CongressWALLET

Bankruptcy Threshold Adjustment and Technical Corrections Act

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

Became Law

Summary

Chapter 13 eligibility and small-business debt thresholds are rewritten to redraw who can reorganize under personal and small-business bankruptcy. The law sets clear dollar caps and new definitions to separate individual filers from larger corporate groups, adds trustee authority to run businesses in some cases, and creates a confirmation test that balances a debtor's ability to pay with creditor protections.

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Bill Overview

Analyzed Economic Effects

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

Chapter 13 limited to $2.75M debt

You must have regular income and owe less than $2,750,000 in noncontingent, liquidated debts to use Chapter 13. If you and your spouse file, your combined noncontingent, liquidated debts must be under $2,750,000. A spouse who is a stockbroker or a commodity broker is excluded from this joint test. This rule starts on the date this law was enacted and ends two years later.

Small business debtor rules and limits

A business can use the small‑business Chapter 11 track if its noncontingent, liquidated debts are $7,500,000 or less. Debts to affiliates or insiders do not count toward that cap, and at least 50% of the debts must come from business activities. Public reporting companies, their affiliates, and members of large affiliated groups over $7,500,000 are excluded. Owners of single‑asset real estate are also excluded. The $7,500,000 amount follows inflation. This applies to cases filed on or after March 27, 2020, including those pending on the day this law was signed, and these eligibility changes last for two years after enactment.

New plan rules and trustee powers

In small‑business Chapter 11, a court can confirm your plan if you can make all payments. The court can also confirm if full payment is reasonably likely and the plan has remedies, like selling nonexempt assets, to protect creditors. A trustee can be authorized to operate the debtor’s business when appropriate. These changes apply to cases filed on or after March 27, 2020, including those pending on the day this law was signed.

Sponsors & CoSponsors

Sponsor

Grassley, Chuck [R-IA]

IA • R

Cosponsors

  • Sen. Durbin, Richard J. [D-IL]

    IL • D

    Sponsored 3/14/2022

  • Sen. Whitehouse, Sheldon [D-RI]

    RI • D

    Sponsored 3/14/2022

  • Sen. Cornyn, John [R-TX]

    TX • R

    Sponsored 3/14/2022

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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