Congress·In Committee·H.R. 7730

Rep. Cline Introduces Bipartisan Bill to Raise Bankruptcy Debt Limits to $7.5 Million

Bankruptcy Threshold Adjustment Act of 2026

22 days ago·View on Congress.gov

Legislative Progress

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Key Points

The bill raises the debt ceiling for small business bankruptcy (Subchapter V) from the current level to $7.5 million. This lets more small businesses use a faster, cheaper reorganization process instead of being pushed into costly Chapter 11 proceedings that often lead to liquidation.
From policy text
“has aggregate noncontingent liquidated secured and unsecured debts as of the date of the filing of the petition or the date of the order for relief in an amount not more than $7,500,000 (excluding debts owed to 1 or more affiliates or insiders)”
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For individuals, the bill sets a new combined debt limit of $2.75 million to qualify for Chapter 13 bankruptcy. Chapter 13 lets families keep their homes and cars while repaying debts over time, rather than facing a full liquidation under Chapter 7.
From policy text
“Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated debts that aggregate less than $2,750,000 or an individual with regular income and such individual's spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontingent, liquidated debts that aggregate less than $2,750,000 may be a debtor under chapter 13 of this title.”
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The bill excludes publicly traded companies and their affiliates from the small business bankruptcy track, keeping the streamlined process focused on genuinely small operations.
From policy text
“any debtor that is a corporation subject to the reporting requirements under section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d))”
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The new thresholds apply to any bankruptcy case filed on or after the date the law takes effect, meaning they would immediately open up options for people and businesses currently shut out of these simpler processes.
From policy text
“The amendments made by this Act shall apply to any case that is commenced under title 11, United States Code, on or after the date of enactment of this Act.”
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The bill has bipartisan support, introduced by Rep. Cline with co-sponsors from both parties, which could help its chances of advancing through the Judiciary Committee.
From policy text
“Mr. Cline (for himself, Mr. Correa, Ms. Lee of Florida, and Mr. Neguse) introduced the following bill; which was referred to the Committee on the Judiciary”
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Impact Analysis

Personal Impact

Who is affectedScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions

Feb 26, 2026House

Referred to the House Committee on the Judiciary.

Feb 26, 2026

Introduced in House

What Happens Next

Projected impacts based on AI analysis

Upon enactment (if the bill passes)

New debt limits take effect for all bankruptcy cases filed after enactment

Small businesses with up to $7.5 million in debt and individuals with up to $2.75 million can immediately use the simpler bankruptcy tracks when filing new cases.

Related News

3 articles

Ripon Advance·7 days ago

Cline, Lee push to raise Chapter 11 cap for small businesses

Reps. Ben Cline and Laurel Lee introduced the bipartisan Bankruptcy Threshold Adjustment Act of 2026 (H.R. 7730) to permanently raise the small business reorganization threshold for Chapter 11 to $7.5 million, providing a more cost-effective process for local businesses to stay operational.

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Salem Times Register·9 days ago

Cline introduces bipartisan bill to expand small business bankruptcy eligibility

Rep. Ben Cline joined a bipartisan group to introduce H.R. 7730, which would permanently set the small business bankruptcy reorganization limit at $7.5 million. The bill aims to help local businesses stay in operation and keep employees on the payroll while they work out a plan to pay debts.

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Daily Bankruptcy News·4 days ago

A New Bill To Set Subchapter V's Debt Limit At $7,500,000 (S. 3977), With A Chance Of Passing?

The article reports on the introduction of S. 3977, the Senate version of the Bankruptcy Threshold Adjustment Act of 2026. The bill seeks to permanently restore the $7.5 million debt limit for Subchapter V small business cases and simplify eligibility for individual reorganization options.