Congress has passed the Bankruptcy Threshold Adjustment Act, which would raise the Subchapter V debt ceiling from about $3.4 million to $7.5 million. The bill is awaiting President Trump's signature; until then, the higher limit is not in effect. The House passed H.R. 7730 by voice vote on September 16, 2026, and the Senate approved it on September 28, after passing a companion measure in August, according to ArentFox Schiff.
Who could qualify
Subchapter V is a Chapter 11 option for eligible small businesses seeking to reorganize. A higher $7.5 million debt ceiling was available under pandemic-era legislation, but it lapsed in June 2024. The limit then returned to an inflation-adjusted $3.424 million. The pending bill would make the $7.5 million ceiling permanent and adjust it for inflation every three years, ArentFox Schiff reports.
The lower ceiling left businesses with debt between $3.424 million and $7.5 million outside Subchapter V's debt limit. The American Bankruptcy Institute estimated that 1,475 potential Subchapter V debtors were excluded between the lapse and early 2026. That figure estimates businesses that could not qualify based on the debt limit; it is not a count of filings or liquidations, according to ABI.
How the process works
Subchapter V differs from traditional Chapter 11 in several procedural respects: it has no mandatory creditors' committee or separate disclosure-statement requirement, and the debtor must file a reorganization plan within 90 days while retaining the exclusive right to propose one. In certain cases, owners may retain equity by committing projected disposable income to a three- to five-year plan. These features are described by ArentFox Schiff and the U.S. Department of Justice materials cited by Frost Law.
Filings before any change
Filing figures provide a snapshot of activity before the proposed higher ceiling took effect. Texas recorded 3,314 bankruptcy petitions across its four federal judicial districts in February 2026, according to The Law Office of Donald E. Hood, PLLC. Nationally, Subchapter V filings totaled 1,663 in the first half of 2026, up 50% from 1,107 in the first half of 2025, according to Epiq. The figures do not establish how the proposed change may affect future filings.
What court records show about outcomes
A clerk presentation from the U.S. Bankruptcy Court for the Western District of Missouri reported eight confirmed nonconsensual Subchapter V plans in that district. That local count does not establish outcomes in Texas. A Northern District of Texas docket listed TEXAS WHEEL REPAIR EXPRESS 360 LLC for a June 25, 2025, confirmation hearing on a consensual Subchapter V plan; the entry records a hearing, not its outcome. These two records alone do not establish dismissal rates, time to resolution, or how Subchapter V outcomes compare with traditional Chapter 11.
A separate change for individual debtors
The act would also replace the separate secured- and unsecured-debt limits for individual Chapter 13 eligibility with a single $2.75 million cap. The current limits cited by ArentFox Schiff are $526,700 for unsecured debt and $1.58 million for secured debt.
