H.R. 7730 — Bankruptcy Threshold Adjustment Act of 2026
Executive Summary
H.R. 7730, the 'Bankruptcy Threshold Adjustment Act,' permanently increases the debt eligibility thresholds for small businesses and individuals seeking to reorganize under the bankruptcy code. By raising the Subchapter V (small business) debt limit to $7.5 million and the Chapter 13 (consumer) debt limit to $2.75 million, the bill ensures that small businesses and individuals with higher debt loads can access streamlined, cost-effective bankruptcy reorganization. This prevents them from being forced into complex, expensive traditional Chapter 11 proceedings or Chapter 7 liquidation, addressing the expiration of previous temporary threshold increases.
Arguments For
- Economic Lifeline: Preserves small businesses and jobs by allowing them to use the cheaper, faster Subchapter V reorganization instead of liquidating or drowning in traditional Chapter 11 legal fees.
- Consumer Protection: Prevents individuals with high debt (e.g., due to housing costs or medical bills) from being forced into expensive corporate-style bankruptcies, reducing court backlogs.
- Bipartisan Win: Provides an easy, bipartisan legislative victory demonstrating that Congress is helping Main Street businesses navigate economic distress.
Likely Supporters
Arguments Against
- Creditor Pushback: Lenders argue that raising the Subchapter V limit to $7.5M strips them of traditional Chapter 11 protections (like the absolute priority rule), which could increase the cost of credit for all small businesses.
- Moral Hazard: Expanding access to easier bankruptcy terms could incentivize riskier borrowing behavior by small businesses and high-net-worth individuals.
Likely Opponents
📋 Key Provisions
- Increases the debt limit for small business debtors under Subchapter V of Chapter 11 to $7,500,000.
- Excludes businesses whose primary activity is owning single asset real estate and publicly traded corporations from the Subchapter V definition.
- Increases the debt limit for individuals filing for Chapter 13 bankruptcy to $2,750,000, combining secured and unsecured debt limits into a single aggregate cap.
- Applies to all bankruptcy cases commenced on or after the date of enactment.
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Sets the small business bankruptcy debt limit to $7,500,000.
"amount not more than $7,500,000"
Excludes single asset real estate from the small business debtor definition.
"owning single asset real estate)"
Sets the Chapter 13 consumer bankruptcy debt limit to $2,750,000.
"liquidated debts that aggregate less than $2,750,000"