Back in September, we told you Congress was close to raising the bankruptcy debt limits. It's no longer close. It's law.
On Tuesday, November 10, 2026, the President signed the Bankruptcy Threshold Adjustment Act (H.R. 7730) into law. That single signature changes who can file under Subchapter V of Chapter 11 and who can file Chapter 13. And for the first time in years, the higher limits don't come with an expiration date.
If you own a New Jersey business that's buried in debt, or you're an individual who was told your debts were "too high" for Chapter 13, pay attention. Some people who didn't qualify for these chapters last week qualify today. Here's what changed, when it took effect, and how to figure out whether it helps you.
You are welcome to come to one of our New Jersey offices and discuss the impact on your situation.
The Act itself is short, about four pages. It does two things. It rewrites the definition of who can be a debtor under Subchapter V, and it rewrites the Chapter 13 eligibility rule found in Section 109(e) of the Bankruptcy Code. If you like reading statutes, the bill text is available on GovInfo. If you don't (and most people don't), here's the plain-English version.
Subchapter V is the streamlined version of Chapter 11 that Congress built for small businesses in 2019. Until this week, a business could only use it if its qualifying debt was no more than $3,424,000. The new law raises that ceiling to $7,500,000.
The rest of the eligibility test looks familiar:
That jump, from roughly $3.4 million to $7.5 million, more than doubles the room. For a lot of family-owned companies in New Jersey (a contractor with equipment loans, a restaurant group with a few locations, a trucking outfit carrying fleet financing) that's the difference between a manageable reorganization and a traditional Chapter 11 that can eat up money the business doesn't have.
The old Chapter 13 rule had two separate caps. Your unsecured debt had to be under $526,700, and your secured debt had to be under $1,580,125. Go over either one and you were out, no matter how far under the other you were.
That split caused real problems. We've seen people with a modest mortgage and a car loan who were nowhere near the secured cap, but who had personally guaranteed a business loan that went bad. The guarantee pushed their unsecured debt over the line, and suddenly Chapter 13 wasn't an option.
The new rule throws out the two-cap system. An individual with regular income can file Chapter 13 if their total noncontingent, liquidated debts, secured and unsecured combined, are less than $2,750,000 on the day they file. A married couple filing jointly is held to the same $2.75 million cap. (Stockbrokers and commodity brokers still can't use Chapter 13. That hasn't changed.)
Immediately, but only going forward. The Act says its changes apply to any bankruptcy case commenced on or after the date of enactment. The date of enactment is November 10, 2026.
In practice, that means:
Not under this law. That's the big difference from what came before. Congress raised the Subchapter V limit to $7.5 million in 2020, then extended it and created a combined Chapter 13 limit in 2022. Both of those changes were temporary. When the 2022 law expired in June 2024, the limits dropped back down, and a lot of businesses that were planning around the higher number got caught off guard.
H.R. 7730 doesn't have a sunset provision. Honestly, that certainty may matter as much as the dollar amounts. Business owners and their advisors can finally plan without watching a calendar.
If you've never been through a Chapter 11, it's hard to appreciate how much more workable Subchapter V is. Traditional Chapter 11 was designed with large companies in mind. It can involve an official committee of unsecured creditors (whose lawyers the estate often ends up paying for), competing plans, lengthy disclosure statements, and fees that add up fast.
Subchapter V strips a lot of that away. Some of the features that make it attractive:
Put simply, Subchapter V lets a viable business that hit a rough patch restructure its debt and keep operating, without the cost of a full-blown Chapter 11. For a New Jersey business with $4 million, $5 million, or $6 million in debt, that path was closed last week. Now it's open.
New Jersey isn't a cheap place to own a home. Between a first mortgage, a home equity line, car loans, and maybe a personal guarantee on a business, it doesn't take an extravagant lifestyle to push past the old caps.
When an individual didn't fit within the Chapter 13 limits, the main alternative was an individual Chapter 11. That works, but it's more complex, more expensive, and slower. Chapter 13, by contrast, gives you a three-to-five-year repayment plan, lets you catch up on mortgage arrears over time, and puts the automatic stay in place to stop foreclosure, garnishments, and collection calls while your plan is underway.
By combining the caps into a single $2.75 million limit, the new law opens Chapter 13 to a lot of people who were previously stuck. That includes self-employed professionals, small business owners who signed personal guarantees, and homeowners in higher-cost parts of the state.
This is where things get tricky, and where you really shouldn't go it alone. Because the new limits only apply to cases filed on or after November 10, 2026, a case that's already pending stays under the old rules.
Some debtors may ask whether they can dismiss a pending case and refile to take advantage of the higher limits. Sometimes that might make sense. But dismissal and refiling carry their own consequences. For example, if an individual's prior case was dismissed within the past year, the automatic stay in the new case may last only 30 days unless the court extends it. Courts also look closely at the reasons behind a refiling. Talk to your bankruptcy attorney before you do anything.
And if you were thinking about filing but held off because the numbers didn't work? Now's the time to run them again.
Eligibility is measured as of the day the petition is filed, so the details matter. A few things your attorney will look at:
Our advice? Don't guess. Eligibility questions are exactly where a short consultation can save you from filing under the wrong chapter.
If you were told before that your debts were too high for Chapter 13 or Subchapter V, it's worth taking a second look. The bankruptcy team at Scura, Wigfield, Heyer, Cammarota & Gonzalez, LLP works with individuals and small businesses throughout New Jersey, with offices in Wayne, Hackensack, Newark, Secaucus, and Clifton. We've also been doing this long enough to remember every time these limits went up and came back down, so we're glad to finally be able to tell clients that this change is here to stay.
Reach out to schedule a consultation. We'll look at your numbers with you and tell you straight whether the new limits open a better path.