Bankruptcy Threshold Adjustment Act of 2026

Key Points

• This bill makes it easier for more small businesses and individuals to use simpler, faster bankruptcy processes. It does this by raising the maximum amount of debt a person or business can have while still being eligible for these streamlined legal options.
• Small businesses with up to $7.5 million in debt would qualify for a special type of bankruptcy that is usually cheaper and faster than the standard version. This allows business owners to keep their doors open and stay in control of their company while they create a plan to pay back their creditors.
• For individuals, the bill sets a single debt limit of $2.75 million to qualify for Chapter 13 bankruptcy. This process is often used by people who want to save their homes from foreclosure or keep their cars while paying off their debts over a period of three to five years.
• Without these changes, many people and businesses with higher debts are forced into more expensive and complicated legal battles. These tougher processes often result in businesses closing down or people losing their assets entirely.
• These new debt limits would apply to any new bankruptcy cases started on or after the day the bill is signed into law.