The American Bankruptcy Institute (ABI) applauds the House of Representatives’ passage yesterday of H.R. 7730, the “Bankruptcy Threshold Adjustment Act.” Rep. Ben Cline (R-Va.) introduced the measure with bipartisan cosponsors in the House on Feb. 26 to permanently raise the debt limit back to $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the legislation also raises the debt limit for individual chapter 13 filings to $2.75 million and removes the distinction between secured and unsecured debt for that calculation.
“ABI applauds the House for passing H.R. 7730 and expanding access to bankruptcy relief for financially distressed small businesses and families,” said ABI Executive Director Amy Quackenboss. “By permanently increasing the debt eligibility limits for subchapter V and chapter 13, Congress is helping more debtors pursue efficient, cost-effective reorganizations while preserving value for all stakeholders.”
Bipartisan companion legislation (S. 3977, “Bankruptcy Threshold Adjustment Act of 2026.”), introduced by Sen. Charles Grassley (R-Iowa), passed the Senate by unanimous consent on August 3. While the substantive language of the bills is identical, the short title of the bill is different between the House-passed and Senate-passed versions. Once both chambers approve the same final text, the legislation will then be enrolled and sent to the President for his signature.
