Federal law lifts Subchapter V debt cap to $7.5 million

A new federal law signed Nov. 10, 2026 raises the Subchapter V eligibility cap to $7.5 million and replaces Chapter 13’s separate secured and unsecured debt limits with a single $2.75 million ceiling. Orlando-based Juan Burgos Law says the change could reopen a reorganization path for more Central Florida businesses and families.

Why it matters: - The higher Subchapter V cap expands access to a faster, more flexible Chapter 11 path for small businesses with debt levels that were previously too high to qualify. - The Chapter 13 change simplifies eligibility for individuals with regular income by replacing two separate debt tests with one combined limit. - The new rules may affect many Central Florida filers, especially in a bankruptcy district that has led the nation in Subchapter V volume.

What happened: - President Donald Trump signed the Bankruptcy Threshold Adjustment Act, H.R. 7730, into law on Nov. 10, 2026, according to a White House statement. - The Subchapter V debt limit increased from $3,424,000 to $7.5 million. - Juan Burgos Law, an Orlando bankruptcy firm, said it updated its English, Spanish and Portuguese guides and is publishing a plain-language summary for Central Florida business owners and families. - The new limits apply only to bankruptcy cases filed on or after Nov. 10, 2026. - Cases filed before that date remain subject to the old limits.

The details: - Subchapter V is the streamlined Chapter 11 option created for small businesses. - A business or business owner now qualifies with up to $7.5 million in noncontingent, liquidated debt. - Noncontingent, liquidated debt is debt that is fixed in amount and certain. - Debt owed to affiliates or insiders does not count toward the cap. - At least half of the debt must come from business activities. - Companies that file with the Securities and Exchange Commission remain ineligible. - Single-asset real estate businesses also remain ineligible. - Chapter 13 previously had two separate debt caps: $526,700 in unsecured debt and $1,580,125 in secured debt. - The new Chapter 13 rule replaces those with a single combined limit of less than $2.75 million in total debt. - In a Subchapter V case, the owner generally keeps control of the business while proposing a repayment plan. - Only the debtor may file a Subchapter V plan. - A trustee is appointed in every Subchapter V case to help the parties reach a plan. - Juan Burgos Law says the process is described on its Subchapter V small business bankruptcy page, and a Spanish-language version is available for Hispanic business owners. - Juan Burgos Law represents individuals and businesses in Chapter 7, Chapter 11, Chapter 13 and Subchapter V cases before the U.S. Bankruptcy Court for the Middle District of Florida. - The firm offers free consultations by phone at (407) 505-4190 or online.

Between the lines: - The law could reopen Subchapter V to businesses with several million dollars in debt that were shut out under the old $3.4 million threshold. - Juan C. Burgos said many Central Florida owners with four or five million dollars in debt were previously told Subchapter V was unavailable. - Burgos said eligibility still depends on the business, personal guarantees and other rules, so the higher cap does not guarantee that every borrower will qualify. - The Middle District of Florida received 324 Subchapter V cases in the 12 months ending June 30, 2026, according to the court’s August 2026 newsletter. - That was the most of any bankruptcy district in the country.

What’s next: - Businesses and individuals filing after Nov. 10, 2026 will be evaluated under the new federal thresholds. - Juan Burgos Law is directing Central Florida clients to review debt levels and eligibility before choosing a bankruptcy path. - More small-business filers may now consider Subchapter V as a reorganization option rather than liquidation.

The bottom line: - The new federal law raises the ceiling for Subchapter V and simplifies Chapter 13 eligibility, broadening bankruptcy options for more debtors starting immediately.