What is the H.R. 7730 Bill the Senate Just Passed?
On Monday, September 28, 2026, the Senate unanimously passed H.R. 7730, the Bankruptcy Threshold Adjustment Act.
The bill permanently restores the Subchapter V limit to $7.5 million and replaces Chapter 13's two separate debt caps with a single $2.75 million limit.
It now goes to the President. If signed, the changes take effect on enactment, so businesses and families may be able to use the new limits within days.
What the Bill Changes for Subchapter V & Chapter 13 Bankruptcy
Subchapter V of Chapter 11 launched in February 2020 with a debt limit of $2,725,625. Congress raised it to $7.5 million during the COVID-19 pandemic, but the increase expired in late June 2024.
Since April 2025, the cap has been $3,424,000, which shut out many small businesses carrying between roughly $3.4 million and $7.5 million in debt. They were too large for Subchapter V and too small to comfortably afford a traditional Chapter 11 bankruptcy.
Key changes of H.R. 7730
- Subchapter V: The limit becomes $7.5 million with no expiration date. At least half of the debt must come from business activity, and debts owed to affiliates or insiders don't count toward the limit.
- Chapter 13: One $2.75 million limit covers secured and unsecured debt together. Today's separate limits are $526,700 unsecured and $1,580,125 secured.
- Timing: The changes apply only to cases commenced on or after the date of enactment. They are not retroactive.
What the Bill Means for People Filing Bankruptcy
Chapter 13 lets individuals keep their homes and other property while repaying debts throuhg a 3-to-5-year plan. Under current law, a filer must fall under both the secured and unsecured caps, and exceeding either one closes the door.
The combined limit helps people whose debts are lopsided.Consider a homeowner in an expensive market with a $1.9 million mortgage and $300,000 in other debt. That person exceeds today's secured limit but would qualify under a $2.75 million total. The same is true for someone with a modest mortgage but more than $526,700 in unsecured debt, such as medical bills or a personally guaranteed loan.
Timing matters since the bill is not retroactive. Request a free confidential consultation with one of our bankruptcy attorneys before deciding whether to file now or wait for the signature.
What the Bill Means for Companies Filing Bankruptcy
Subchapter V was designed for businesses that need a faster, cheaper reorganization.
In most cases there is no creditors' committee, a trustee works to help the parties reach a consensual plan, and the debtor must file a plan within 90 days. Owners can also keep their equity without meeting the absolute priority rule, as lon as the plan commits their projected disposable income to creditors for 3 to 5 years.
At $7.5 million, that toolkit reaches restaurant groups, contractors, medical practices, and light manufacturers that were previously excluded. When the higher limit was in place before, companies reorganized instead of liquidating, which protected jobs and vendor relationships.
Companies should still check the fine print. The 50% business-debt requirement applies, and affiliated groups are measured in the aggregate, so a parent company and its subsidiaries with more than $7.5 million in combined debt will not qualify.
What the Bill Means for Bankruptcy Lawyers
Debtor's counsel should re-screen prospects they turned away since mid-2024 because many may now be eligible. Subchapter V deadlines are tight, so financial records, projections, and a reorgnization strategy need to be ready early.
Unlike the 2022 increase, which reached pending Subchapter V cases, the H.R. 7730 bill only covers new filings. Lawyers will need to advise clients on whether to file under current rules or wait for enactment, and to track the exact signing date.
Creditor-side counsel and credit managers should expect more Subchapter V cases in the $3.4 million to $7.5 million range. Most Subchapter V cases has no creditors' committee, and a plan can be confirmed over creditor objections, so the best move is to engage early and examine the debtor's projections closely.
Subchapter V trustees will see the most immediate effect. The National Association of Bankruptcy Trustees advocated for the bill, and trustees can expect a surge of new appointments. Even Chapter 13 practitioners and standing trustees should prepare for larger, higher-volume cases, particularly in high-cost housing markets.
Weighing Your Options? Get a Free Bankruptcy Consultation
If the President signs H.R. 7730, more struggling businesses and families will have access to faster, cheaper, and more flexible bankruptcy options. Debtors have a stronger chance at a fresh start, employers can keep their staff, and professionals who serve them will stay busy.
The bill is not law until it's signed, so anyone weighing a filing should get legal advice now.
At Lakelaw, we have represented over 10,000 cases in the past 50 years, helping our clients to confidently navigate through any financial crisis. We're also selected by Super Lawyers, Best Lawyers, Chambers Spotlight, and Martindale-Hubbell with the highest AV Preeminent rating.
If your a business or individual residing in Illinois, Indiana, and Wisconsin, speak with one of our trusted bankruptcy lawyers today.