Bankruptcy relief expanded for small businesses and consumers struggling with debt
H.R. 7730 — Bankruptcy Threshold Adjustment Act of 2026 · Filed by Ben Cline (R-VA) · 6 cosponsors · Introduced Feb 26, 2026 · Reported out
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What it does
This bill raises the debt thresholds that determine who can file for bankruptcy protection. It increases the small-business bankruptcy debt limit from the current level to $7.5 million and raises the consumer bankruptcy debt limit to $2.75 million. Higher thresholds mean more people and businesses qualify for bankruptcy relief, but the bill also excludes publicly traded companies and their affiliates from small-business bankruptcy eligibility.
Why we flagged it
The bill's core function is to raise debt thresholds that determine who qualifies for bankruptcy protection under chapters 11 (small business) and 13 (consumer). This is a straightforward eligibility reform, not a deregulation or carve-out.
What the text implies
- Raising thresholds may increase bankruptcy filings among small businesses and consumers previously ineligible, potentially affecting credit markets and lender risk assessment.
- The exclusion of publicly traded companies and their affiliates from small-business bankruptcy (§ 1182(1)(B)(ii)–(iii)) creates a two-tier system: smaller private businesses gain access while larger public entities remain barred, potentially concentrating bankruptcy relief among smaller enterprises.
The full analysis lists 3 implications of this text.
Who stands to gain
individuals and small businesses seeking bankruptcy protection; bankruptcy attorneys and trustees (increased caseload)