Federal legislation that would permanently increase debt limits for Subchapter V and Chapter 13 bankruptcy could significantly expand access to reorganization options for small businesses and individuals.
The legislation, which has passed both the U.S. House and Senate, would increase the Subchapter V debt limit from $3.4 million to $7.5 million. It would also replace Chapter 13’s separate secured and unsecured debt limits with a single $2.75 million ceiling.
In Bloomberg Law’s coverage of the legislation, Wolfson Bolton Kochis bankruptcy attorney Michelle H. Bass discussed how the changes could affect individuals and small-business owners considering bankruptcy.
Michelle noted that for some debtors, the timing of a bankruptcy filing could substantially affect the relief available to them. She explained that the expanded Chapter 13 limit would particularly benefit individuals and couples whose personal finances are closely connected to their businesses, including franchisees, contractors, and other small-business owners with significant personal debt or personally guaranteed business obligations.
“The increased and combined nature of the new debt limit cap for Chapter 13 filers under this bill is far overdue,” Michelle told Bloomberg Law.
The higher limits could allow more individuals and businesses to pursue reorganization under Chapter 13 or Subchapter V rather than facing the added expense and complexity of a traditional Chapter 11 proceeding.
Read the entire Bloomberg Law article: Higher Debt Caps to Boost Small Business, Personal Bankruptcies
Source: Bloomberg Law, “Higher Debt Caps to Boost Small Business, Personal Bankruptcies,” Sept. 30, 2026.