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119-hr-7730119th CongressWALLET

Bankruptcy Threshold Adjustment Act

Sponsored By: Representative Cline, Ben [R-VA-6]

Passed Senate

Summary

Raises and clarifies bankruptcy debt limits for small-business Chapter 11 cases and consumer Chapter 13 cases. It would set a $7.5 million cap for small-business Chapter 11 eligibility and a $2.75 million cap for Chapter 13 filers.

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  • Individuals and families: Individuals with regular income could use Chapter 13 only if their noncontingent, liquidated debts total less than $2.75 million. Joint filers (an individual and spouse) are treated the same, with an exception for stockbrokers and commodity brokers.
  • Small businesses: A person engaged in commercial activity could qualify as a small-business debtor for Chapter 11 if total noncontingent, liquidated secured and unsecured debts are $7.5 million or less and at least 50 percent of those debts come from the debtor's commercial activities. The bill excludes single-asset real estate owners, corporations that report to the Securities and Exchange Commission, their affiliates, and affiliated groups whose combined debts exceed $7.5 million.
  • Applicability: The new debt definitions and caps would apply to any bankruptcy case commenced on or after the date of enactment.

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Bill Overview

Analyzed Economic Effects

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

New debt limit for household bankruptcy

The bill would set a Chapter 13 debt limit below $2.75 million for individuals with regular income. Debts would be measured on the petition filing date. Only debts with known amounts that do not depend on a future event would count. An individual and spouse would qualify together if their combined debts were below that limit. Stockbrokers and commodity brokers would be excluded. These rules would apply to cases started on or after enactment.

New bankruptcy debt limit for small businesses

The bill would set a $7.5 million debt ceiling for the small-business Chapter 11 process. Applicants would need to conduct business, with at least 50% of their debt coming from business activities. Eligible applicants would include related businesses that are also bankruptcy debtors. Secured and unsecured debts would count if their amounts are known and do not depend on a future event. Debt would be measured at petition filing or the order for relief; debts owed to related businesses or insiders would not count. Members of related debtor groups with combined qualifying debt above $7.5 million would be excluded. Businesses mainly owning single-asset real estate, corporations subject to federal securities reporting requirements, and those corporations' affiliates would also be excluded. These rules would apply to cases started on or after enactment.

Sponsors & CoSponsors

Sponsor

Cline, Ben [R-VA-6]

VA • R

Cosponsors

  • Rep. Correa, J. Luis [D-CA-46]

    CA • D

    Sponsored 2/26/2026

  • Rep. Lee, Laurel M. [R-FL-15]

    FL • R

    Sponsored 2/26/2026

  • Rep. Neguse, Joe [D-CO-2]

    CO • D

    Sponsored 2/26/2026

  • Rep. Gooden, Lance [R-TX-5]

    TX • R

    Sponsored 3/24/2026

  • Rep. Lofgren, Zoe [D-CA-18]

    CA • D

    Sponsored 3/25/2026

  • Rep. Taylor, David J. [R-OH-2]

    OH • R

    Sponsored 6/8/2026

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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