Bankruptcy Threshold Adjustment Act

Summary#

This bill changes who can file certain kinds of bankruptcies by raising the dollar limits on allowable debts. For small-business reorganizations under the small business provisions of title 11, it sets the maximum amount of aggregate noncontingent, liquidated secured and unsecured debts at $7,500,000. The text excludes debts owed to affiliates or insiders when measuring that limit and excludes certain debtors, including groups of affiliated debtors whose combined debts exceed $7,500,000, corporations required to report to the Securities and Exchange Commission, and affiliates of those reporting corporations. For individual consumer bankruptcy under chapter 13, the bill replaces the prior subsection and sets a new eligibility limit so that only an individual (or an individual and spouse) with noncontingent, liquidated debts that total less than $2,750,000 may be a chapter 13 debtor. The changes apply to cases started on or after the date the bill becomes law.

What it means for you#

• Small businesses: A business that files under the small-business provisions can qualify if its total noncontingent, liquidated debts (excluding debts to affiliates or insiders) are $7,500,000 or less, and at least half of those debts came from the business's commercial activity. Certain businesses still cannot use the small-business rules, such as groups of related debtors whose combined debts exceed $7,500,000 and public companies or their affiliates.
• Individuals: An individual (or an individual and spouse) with regular income and total noncontingent, liquidated debts under $2,750,000 can file under chapter 13. Stockbrokers and commodity brokers are excluded from that provision.
• Timing: These rules apply only to bankruptcy cases filed on or after the date the bill is enacted.

Expenses#

No publicly available information on federal budgetary costs or savings is included in the provided text.

Proponents' View#

No publicly available information on supporters' statements or official arguments is included in the provided text.

Opponents' View#

No publicly available information on opponents' statements or official arguments is included in the provided text.