Congress Increased Bankruptcy Debt Limits

New legislation expands eligibility for small business and individual reorganization, potentially helping more households avoid liquidation.

Updated on Sept. 30, 2026 in Debt Relief

Isometric editorial illustration of a heavy brass balance scale on a stone pedestal, representing policy changes in bankruptcy regulation. — The U.S. Senate passed H.R. 7730 on September 28, 2026, raising debt limits for bankruptcy relief to better accommodate modern economic conditions for households and businesses. AI Illustration. Upload story photo >

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Should the federal government make it easier for small businesses and individuals to declare bankruptcy?

The U.S. Senate passed H.R. 7730 on September 28, 2026, to raise debt limits for bankruptcy relief. This change aims to provide more businesses and individuals with a path to reorganize their finances instead of liquidating assets.

Why it matters

Rising home prices and debt levels have frequently pushed borrowers past previous eligibility caps, making it harder for many to qualify for protection. This measure restores and expands access to reorganization, helping those who were previously excluded by outdated limits.

The legislation raises the Subchapter V debt limit to $7.5 million and sets a $2.75 million ceiling for Chapter 13 bankruptcy. These changes follow a 67% surge in Subchapter V elections during the first quarter of 2026.

The players

Congress

The federal legislative body responsible for setting bankruptcy code standards and eligibility thresholds for American citizens and small businesses.

President Donald Trump

The current President of the United States whose signature is required to finalize H.R. 7730 into law.

The details

Subchapter V streamlines the reorganization process, allowing creditors to vote on plans more efficiently. By consolidating Chapter 13 debt limits into a single $2.75 million cap and removing distinctions between secured and unsecured debt, the bill broadens access for those managing high-cost obligations. These updates ensure that debt relief pathways better reflect current economic realities for small businesses and households.

2020 marked the start of Subchapter V election tracking.
2024 saw the expiration of the previous higher debt limit.
Q1 2026 recorded a 67% increase in Subchapter V elections.
September 28, 2026, the date the Senate passed H.R. 7730.

Money Landscape

H.R. 7730 marks a significant shift in the bankruptcy cycle by adjusting thresholds that had become outdated due to inflationary pressures on home prices and debt. This update follows a period of heightened demand for reorganization, with over 10,300 Subchapter V filings tracked since 2020.

Households and small business owners previously disqualified from bankruptcy relief by debt caps should review their current liabilities to see if they now fall within the new limits. Consult with a qualified bankruptcy attorney or financial professional to determine if these changes impact your eligibility.

The takeaway

This legislation provides a necessary adjustment to bankruptcy eligibility as debt obligations and home costs have outpaced existing federal caps. Keep track of the official signing date of H.R. 7730 to understand when these expanded protections take full legal effect.