US president signs law permanently raising bankruptcy limits
The law raises eligibility limits for small-business Chapter 11 and consumer Chapter 13 proceedings, allowing debtors with more debt to qualify.
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The law raises eligibility limits for small-business Chapter 11 and consumer Chapter 13 proceedings, allowing debtors with more debt to qualify.
The US president signed the Bankruptcy Threshold Adjustment Act on 10 November 2026, permanently raising eligibility limits for small-business Chapter 11 and consumer Chapter 13 bankruptcy proceedings, the White House said.
The law raises the debt limit for Subchapter V, a part of Chapter 11, from $3 million to $7.5 million. It also raises the Chapter 13 limit for individuals with regular income to $2.75 million, Bloomberg Law said.
Chapter 13 allows individuals with regular income to propose a court-supervised plan to repay creditors. A bankruptcy court can approve a plan without creditors' approval if it meets legal requirements.
Chapter 13 plans usually last three to five years and cannot exceed five years. During that period, creditors can collect previously incurred debts only through the bankruptcy court. Chapter 11 is considerably more complex and expensive than Chapter 13.
Representative Ben Cline, a Virginia Republican, introduced the bill. The US House of Representatives passed it by voice vote after the US Senate approved a companion bill in August.
The White House signing statement did not specify the previous or new limits or when the changes take effect.
President Donald Trump’s Agriculture Department published the proposed eligibility restriction on 10 November. It estimates that 17% of recipients would leave the food-assistance program if the change takes effect.
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