Bankruptcy Threshold Adjustment Act
Summary
What This Bill Does
The bill rewrites two Bankruptcy Code eligibility provisions. A qualifying business debtor may use subchapter V with no more than $7.5 million in aggregate noncontingent, liquidated secured and unsecured debt, excluding affiliate and insider debt. At least half of the counted debt must arise from commercial or business activity. Chapter 13 eligibility would use a single combined ceiling of less than $2.75 million for individuals with regular income, including qualifying joint cases with a spouse.
Who Benefits and How
Eligible business debtors and individual borrowers gain access to the specified reorganization procedures at these debt levels. Debtor employees and families may benefit when restructuring preserves operations or income, but the bill neither forgives debts automatically nor guarantees confirmation of a repayment plan. Bankruptcy attorneys gain a more straightforward combined chapter 13 eligibility calculation.
Who Bears the Burden and How
Bankruptcy courts and trustees must apply the revised definitions to cases commenced on or after enactment. Creditors could encounter different reorganization procedures for qualifying debtors, with consequences depending on each case. Single-asset real-estate businesses remain excluded from subchapter V. Public-reporting corporations and their affiliates are excluded, and affiliated debtor groups exceeding the $7.5 million ceiling cannot use it. Chapter 13 still excludes stockbrokers and commodity brokers.
Key Provisions
- Modifies subchapter V eligibility to allow no more than $7.5 million in counted business debt.
- Requires at least 50 percent business-related debt and retains specified affiliate and public-company exclusions.
- Modifies chapter 13 eligibility to require less than $2.75 million in combined noncontingent, liquidated debt.
- Limits the amendments to bankruptcy cases commenced on or after enactment.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Set a $7.5 million business-debt eligibility ceiling for subchapter V bankruptcy and a combined $2.75 million debt limit for chapter 13.
Key Policy Areas
Bankruptcy, Consumer Finance
Primary Purpose
Set a $7.5 million business-debt eligibility ceiling for subchapter V bankruptcy and a combined $2.75 million debt limit for chapter 13.
Policy Domains
Bankruptcy Threshold Adjustment Act
Identified Gains
- Qualifying business debtors
- Individuals with regular income seeking chapter 13
- Debtor employees
Identified Costs
- Bankruptcy courts
- Bankruptcy trustees
- Creditors
Sponsors
Legislative Progress
ReportedReceived in the Senate.
Motion to reconsider laid on the table Agreed to without …
On motion to suspend the rules and pass the bill, …
Passed/agreed to in House: On motion to suspend the rules …
DEBATE - The House proceeded with forty minutes of debate …
Considered under suspension of the rules.
Mr. Cline moved to suspend the rules and pass the …
Placed on the Union Calendar, Calendar No. 684.
Reported (Amended) by the Committee on Judiciary. H. Rept. 119-783.
Additional sponsors: Mr. Gooden, Ms. Lofgren, and Mr. Taylor
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Chapter 13 debtor applicants, Qualifying business debtors
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "courts"
- → Bankruptcy courts
- "business"
- → Qualifying business debtors under section 1182
- "creditors"
- → Creditors in covered bankruptcy cases
- "individuals"
- → Chapter 13 debtors under section 109(e)
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology