The Senate passed the Bankruptcy Threshold Adjustment Act of 2026 unanimously, aiming to restore access to critical bankruptcy programs for American families and small businesses by reinstating modern debt limits for Subchapter V and Chapter 13, according to an Aug. 4 announcement from Senate Judiciary Committee Chairman Chuck Grassley and Ranking Member Dick Durbin.
Grassley said, “Our nation’s bankruptcy code should work for Americans, not against them. By eliminating barriers to reorganization and restoring modern debt limits, the bipartisan Bankruptcy Threshold Adjustment Act would provide American families and small businesses the tools they need to regain their financial footing in a quicker, more streamlined process. I thank my colleagues in the Senate for their unanimous support of our legislation, and I urge the House of Representatives to swiftly pass this needed legislation.”
Durbin said, “Bankruptcy is often a painful last resort for small business owners. This bill makes permanent a quicker and cheaper pathway for entrepreneurs to settle debts, keep the lights on, and keep serving their neighbors. It also expands eligibility for Chapter 13 bankruptcy to help more families manage rising costs, stay in their homes, and get back on their feet. With unanimous passage in the Senate, I encourage the House of Representatives to quickly pass this bill—and for the President to sign it into law.”
The bipartisan legislation is cosponsored by Senators John Cornyn, Sheldon Whitehouse, Chris Coons and the late Lindsey Graham.
The Grassley-Whitehouse Small Business Reorganization Act established Subchapter V within Chapter 11 of the Bankruptcy Code in 2019. Subchapter V was designed to streamline bankruptcy processes for small business owners by reducing procedural burdens and lowering filing costs. In 2020, subsequent legislation increased eligibility by raising Subchapter V’s upper debt limit to $7.5 million.
Further adjustments were made with enactment of the Grassley-Whitehouse Bankruptcy Threshold Adjustment and Technical Corrections Act in 2022 that extended these thresholds but expired in 2024; as a result, debt limits reverted until now. The new act permanently restores these higher thresholds: $7.5 million under Subchapter V for small businesses and $2.75 million under Chapter 13 for individuals or families.
The Senate Judiciary Committee plays a key role as a standing committee overseeing judicial matters including constitutional protections and public safety policy development nationwide through its legislative duties; it is chaired by one senator with membership from both major political parties based in Washington, D.C., according to the official website.