Bankruptcy Threshold Adjustment Act of 2026

The Bankruptcy Threshold Adjustment Act of 2026 would modify bankruptcy eligibility requirements by permanently increasing the debt threshold for small business reorganization under Chapter 11 bankruptcy. Currently, small businesses with debts exceeding $3 million cannot use Subchapter V, a streamlined bankruptcy process. If enacted, this bill would raise that threshold to $7.5 million, allowing more small businesses to access this faster, more cost-effective bankruptcy route while negotiating with creditors.

Subchapter V bankruptcy is designed to be less expensive than traditional bankruptcy because it involves no creditors' committee and requires less spending on attorneys and trustees. The bill has passed committee review and is eligible for a floor vote in the House, though it still requires passage by both chambers and presidential signature to become law.