Senate Unanimously Passes Grassley-Durbin Bankruptcy Legislation to Support Small Businesses and American Families

Senate Unanimously Passes Grassley-Durbin Bankruptcy Legislation to Support Small Businesses and American Families

WASHINGTON - Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Dick Durbin (D-Ill.) are applauding the Senate's unanimous passage of their Bankruptcy Threshold Adjustment Act of 2026 to restore Americans' access to critical bankruptcy programs by reinstating modern debt limits for Subchapter V and Chapter 13.

"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," Grassley said. "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."

"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," Durbin said.

The bipartisan legislation is cosponsored by Sens. John Cornyn (R-Texas), Sheldon Whitehouse (D-R.I.), Chris Coons (D-Del.) and the late Sen. Lindsey Graham (R-S.C.).

Bill text can be found HERE.

Background:

The Grassley-Whitehouse Small Business Reorganization Act, signed into law in 2019, established Subchapter V within Chapter 11 of the Bankruptcy Code. Subchapter V streamlined the Chapter 11 bankruptcy process for small business owners by reducing procedural burdens and lowering filing costs. Legislation signed into law in 2020 allowed more small businesses to qualify for these streamlined procedures by increasing the upper debt limit for Subchapter V to $7.5 million.

In 2022, the Grassley-Whitehouse Bankruptcy Threshold Adjustment and Technical Corrections Act was signed into law, extending the $7.5 million debt limit for small businesses filing under Subchapter V and establishing a new debt limit of $2.75 million for individuals and families filing under Chapter 13. However, when the Bankruptcy Threshold Adjustment and Technical Corrections Act expired in 2024, the debt thresholds for both programs reverted to lower levels.

The Grassley-Durbin Bankruptcy Threshold Adjustment Act of 2026 would permanently restore the Subchapter V debt limit to $7.5 million and the Chapter 13 debt limit to $2.75 million.

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