Bankruptcy Threshold Adjustment Act of 2026
Sponsored By: Representative Cline, Ben [R-VA-6]
In Committee
Summary
Changes federal bankruptcy debt limits so more small businesses could use the small-business Chapter 11 rules while consumer access to Chapter 13 is capped at $2.75 million.
Show full summary
- Small businesses: Raises the small-business Chapter 11 eligibility cap to $7.5 million in noncontingent, liquidated secured and unsecured debts. It excludes debts owed to affiliates or insiders and excludes debtors in an affiliated group whose combined debts exceed $7.5 million or corporations that must file reports with the Securities and Exchange Commission.
- Individuals and families: Sets the Chapter 13 eligibility ceiling at $2.75 million for single filers and the same $2.75 million cap for joint filers. The joint filer rule treats stockbrokers and commodity brokers as exceptions.
- Timing and budget scope: Would apply to bankruptcy cases commenced on or after enactment and does not include new funding, appropriations, or tax changes.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 1 benefits, 1 costs, 1 mixed.
Higher Chapter 11 limit for small businesses
If enacted, a debtor would qualify as a small-business Chapter 11 debtor only if their noncontingent, liquidated secured and unsecured debts (not including debts owed to affiliates or insiders) are $7,500,000 or less when they file. At least 50 percent of those debts must have come from the debtor's commercial or business activities. The rule would exclude debtors whose main activity is owning single-asset real estate, any member of an affiliated group whose group's debts exceed $7,500,000 (excluding affiliate/insider debt), and corporations that must file reports under sections 13 or 15(d) of the Securities Exchange Act and their affiliates. These conditions would apply only to cases filed on or after the date of enactment.
New $2.75M Chapter 13 limit
If enacted, you would be able to use Chapter 13 only if your noncontingent, liquidated debts are under $2,750,000 when you file. If you file jointly, you and your spouse together must owe less than $2,750,000. Joint filing is not allowed if the spouse is a stockbroker or a commodity broker. Debts must be noncontingent and liquidated on the petition filing date. These rules would apply only to cases filed on or after the date of enactment.
Changes apply only to new cases
If enacted, the bill's amendments to bankruptcy law would apply only to cases started on or after the date of enactment. Cases filed before enactment would not be affected. That means people and businesses with pending cases would keep the old rules, while new filers would be governed by the new debt limits and exclusions.
Sponsors & CoSponsors
Sponsor
Cline, Ben [R-VA-6]
VA • R
Cosponsors
Rep. Correa, J. Luis [D-CA-46]
CA • D
Sponsored 2/26/2026
Lee (FL)
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
Lofgren
CA • D
Sponsored 3/25/2026
Roll Call Votes
No roll call votes available for this bill.
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