FORT LAUDERDALE, FL—Van Horn Law Group, P.A. is highlighting significant changes to federal bankruptcy law following President Donald Trump’s signing of H.R. 7730, the Bankruptcy Threshold Adjustment Act, on November 10, 2026. The new law permanently increases the debt eligibility limit for small businesses seeking streamlined Chapter 11 reorganization and expands Chapter 13 eligibility for individuals, including homeowners with substantial mortgage debt.
Under the new legislation, the debt limit for Subchapter V of Chapter 11 increases from $3,424,000 to $7.5 million, permanently restoring a higher threshold that previously expired in 2024. The law also replaces Chapter 13’s separate debt limits of $526,700 in unsecured debt and $1,580,125 in secured debt with a single combined debt limit of $2.75 million.
Subchapter V, established under the Small Business Reorganization Act of 2019, provides eligible small businesses with a streamlined alternative to traditional Chapter 11 bankruptcy. The process generally reduces administrative costs and procedural burdens while allowing qualifying business owners to propose plans to reorganize their debts and continue operating.
The higher eligibility threshold is particularly relevant in Florida, where the Middle District of Florida recorded more Subchapter V bankruptcy filings than any other federal judicial district in the country over the past year.
The legislation also introduces significant changes for individuals seeking Chapter 13 bankruptcy protection. Previously, debtors had to satisfy separate secured and unsecured debt limits. Under the new law, those limits are replaced by a combined $2.75 million threshold, potentially allowing more individuals with substantial mortgage balances or business-related debt to qualify for Chapter 13.
The new debt limits apply to bankruptcy cases filed on or after November 10, 2026. Cases filed before that date remain subject to the previous eligibility thresholds.
The legislation follows earlier efforts to expand bankruptcy relief for small businesses. President Trump signed the Small Business Reorganization Act in 2019, establishing Subchapter V, and the CARES Act in 2020, which temporarily raised the Subchapter V debt limit to $7.5 million. That higher threshold expired in 2024, leaving some small businesses ineligible for the streamlined process until the new legislation restored it.
With more than 11,000 bankruptcy cases handled, Van Horn is among the nation’s leading bankruptcy filers and teaches bankruptcy law at the University of Florida. He advises individuals and business owners on Chapter 7, Chapter 11, Chapter 13 and other bankruptcy-related matters.
