Congress has passed H.R. 7730, the Bankruptcy Threshold Adjustment Act, which would bring back the higher debt ceilings for small-business and family bankruptcies that lapsed in 2024. The House passed the bill by voice vote on Sept. 16, and the Senate passed it without amendment by unanimous consent on Sept. 28. The latest action on the official bill-status record is that Senate vote, and it shows no signature yet.

The numbers the bill changes

The Congressional Research Service summary in the bill record says the Subchapter V debt limit would rise from about $3.4 million to $7.5 million. Subchapter V is the faster, cheaper form of Chapter 11 for small businesses. The federal courts’ Chapter 11 guide lists the current cap as combined debts of $3,424,000 or less, with at least half arising from business activities.

For families, the Chapter 13 limit would rise from about $2.1 million to $2.75 million. Today the courts’ Chapter 13 guide lists separate caps of $526,700 in unsecured debt and $1,580,125 in secured debt, which together come to about $2.1 million. Under the bill, secured and unsecured debt would both count toward a single combined limit of $2.75 million, according to the bill summary.

The question for a household or a small-business owner is whether their total debt sits in the band between the old ceilings and the new ones. A homeowner with a large mortgage and a business loan can cross the Chapter 13 caps more easily than the headline number suggests, because secured debt is counted separately today. An owner whose business debts run above $3.4 million cannot use Subchapter V now, but could under the bill.

Congress finished its vote on Sept. 28, and no signing has been recorded since, so the new ceilings are not law on any date yet.

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How the bill got through both chambers

Rep. Ben Cline, a Virginia Republican, introduced H.R. 7730 on Feb. 26. The House Judiciary Committee ordered it reported with amendments by voice vote on March 26, and the House passed it as amended under suspension of the rules on Sept. 16 after 40 minutes of debate.

The Senate had moved first on a companion measure. On Aug. 4, the Senate unanimously passed its version, and Judiciary Committee Chairman Chuck Grassley said, “Our nation’s bankruptcy code should work for Americans, not against them.” Ranking member Dick Durbin said the bill “makes permanent a quicker and cheaper pathway for entrepreneurs to settle debts,” according to the Senate Judiciary Committee. Durbin also said it widens Chapter 13 eligibility to help more families keep their homes. The Senate’s final vote on the House bill came Sept. 28.

What the old limits did, and what the change would not do

The Senate Judiciary release says both limits reverted to lower levels when the 2022 law that raised them expired in 2024. The bill record describes the new text as restoring limits that expired in 2024. It is a change to who may use certain bankruptcy chapters. It does not change how those chapters work, and it does not erase any debt.

Subchapter V cases already run on a short clock. The courts’ guide says only the debtor may file a plan, a trustee is appointed in every case, and a plan can be confirmed when all projected disposable income goes into it over three to five years. A business that moved above the $3,424,000 line after 2024 had to use traditional Chapter 11, which the guide contrasts with Subchapter V’s accelerated deadlines. Chapter 13 plans for individuals, including self-employed people, run three to five years as well.

It also does nothing until it becomes law. A bill that has cleared both chambers is not a law until the president signs it, and the White House’s briefings and statements page lists signings of other bills on Sept. 30 and Oct. 7 but no signing of H.R. 7730.

Checking whether a bankruptcy chapter fits the debt

The free official route is the federal courts’ bankruptcy basics pages, linked above, which list the limits that apply on the day of filing. Chapter 13 plans run three to five years, and the guide says a person must have received credit counseling from an approved agency within 180 days before filing. The court charges a $235 case filing fee and a $75 administrative fee, and may allow installment payments.

A person weighing either chapter should add up secured and unsecured debt separately, since that is how Chapter 13 counts it today, and note the date. The courts’ guides measure both limits “as of the date of filing,” and the figures they list now are the current ceilings.

The status to watch is the bill record itself. A signing, or a veto, would appear there as the next action after Sept. 28.

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This article was produced with AI assistance and edited for accuracy against the sources linked above.