H.R. 7730: Bankruptcy Threshold Adjustment Act of 2026

This bill, titled the Bankruptcy Threshold Adjustment Act of 2026, aims to modify the eligibility requirements for filing bankruptcy under U.S. law. It makes certain changes to how much debt individuals and small businesses can have while still qualifying for different bankruptcy protections.

Debt Limit Modifications

1. Small Business Bankruptcy Debt Limit

The bill raises the debt limit for small businesses that can file for bankruptcy relief. Specifically, it defines a "debtor" as a person engaged in commercial activities who has total noncontingent liquidated secured and unsecured debts of up to $7,500,000. Importantly, at least 50% of these debts must arise from the business's commercial activities. However, it excludes individuals who:

• Are part of a group of affiliated debtors with more than $7,500,000 in total debts.
• Are corporations subject to specific reporting requirements under U.S. securities laws.
• Are affiliates of such corporations.

2. Consumer Bankruptcy Debt Limit

For individual consumers, the bill modifies the debt limit to allow individuals with regular income to file for Chapter 13 bankruptcy if their total noncontingent, liquidated debts are less than $2,750,000. This applies to individuals alone or to couples where both spouses owe these debts, but excludes stockbrokers and commodity brokers from this eligibility.

Effective Date

The changes introduced by this bill will apply to any bankruptcy case that is initiated after the law is enacted.

Relevant Companies

None found