Bankruptcy debt limits raised to $7.5M for small businesses, $2.75M for individuals

What does this do?

HR 7730 raises the debt limit for small businesses using Subchapter V bankruptcy from the previous ceiling to $7.5 million, and raises the Chapter 13 debt limit for individuals to $2.75 million. Subchapter V is a faster, lower-cost reorganization process designed for small businesses. Chapter 13 allows individuals with steady income to repay debts over three to five years under a court-approved plan while keeping their property.

Who does it affect?

Small business owners with debts under $7.5 million now have access to the Subchapter V process, though publicly traded companies and their affiliates are excluded. Individual consumers and married couples with significant debt loads who previously exceeded the Chapter 13 limit may now qualify under the higher threshold.

Why does it matter?

By raising these thresholds, more debtors gain access to reorganization options rather than being forced into liquidation or other bankruptcy paths. The change expands eligibility without altering the underlying rules of either process.

Where does it stand?