The American Bankruptcy Institute (ABI) applauds the introduction of S. 3823, the “Bankruptcy Threshold Adjustment and Technical Corrections Act,” which would permanently set the debt limit at $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the bill also would raise the debt limit for individual chapter 13 filings to $2.75 million and remove the distinction between secured and unsecured debt for that calculation. “There is no doubt that the effects of the COVID-19 pandemic and its aftermath continue to put a significant strain on individuals and small businesses,” said ABI Executive Director Amy Quackenboss. “By permanently setting the debt limit for subchapter V at $7.5 million and increasing the eligibility of individuals to access relief under chapter 13, the ‘Bankruptcy Threshold Adjustment and Technical Corrections Act’ provides a greater number of struggling small businesses and families with an efficient path to reorganizing their finances.” Sen. Charles Grassley (R-Iowa) introduced the bipartisan S. 3823 on March 14, aiming to make the subchapter V debt limit permanent at $7.5 million and index it to inflation, increase the chapter 13 debt limit to $2.75 million, remove the distinction between secured and unsecured debt, make Small Business Reorganization Act technical amendments, and make Bankruptcy Administration Improvement Act technical amendments. The legislation is co-sponsored by Senate Judiciary Chair Richard Durbin (D-Ill.) and Sens. Sheldon Whitehouse (D-R.I.) and John Cornyn (R-Texas).
