A major change to federal bankruptcy law could offer new financial relief opportunities to Americans struggling with debt.
On November 10, 2026, President Donald Trump signed the Bankruptcy Threshold Adjustment Act (H.R. 7730) into law, permanently increasing debt eligibility limits for Chapter 13 bankruptcy and certain Chapter 11 small business bankruptcy filings.
The legislation expands access to bankruptcy protection for individuals, families, and business owners who previously exceeded federal debt limits.
For Florida residents facing rising living expenses, substantial mortgage balances, mounting credit card debt, or financial challenges associated with running a business, the new law could provide additional options for regaining financial stability.
The Bankruptcy Threshold Adjustment Act is a federal law that increases the amount of debt an individual or qualifying small business can carry while remaining eligible for certain bankruptcy proceedings.
Previously, bankruptcy debt limits prevented some individuals and business owners from pursuing restructuring options that may have been appropriate for their financial circumstances.
The new legislation addresses those restrictions by permanently raising eligibility thresholds for two important forms of bankruptcy protection:
The changes took effect on November 10, 2026, and apply to bankruptcy cases filed on or after that date.
One of the most significant changes under the new law involves Chapter 13 bankruptcy eligibility.
Previously, individuals seeking Chapter 13 protection were subject to separate debt limits of $526,700 in unsecured debt and $1,580,125 in secured debt.
Under the Bankruptcy Threshold Adjustment Act, those separate limits have been replaced with a combined debt limit of less than $2.75 million in qualifying noncontingent, liquidated debts.
This change could be particularly meaningful for Florida homeowners carrying substantial mortgage balances alongside other financial obligations.
Why This Matters for Florida Homeowners
Chapter 13 bankruptcy can provide eligible individuals with an opportunity to reorganize debt while potentially protecting important assets, including their homes.
For example, a homeowner who has fallen behind on mortgage payments may be able to use a Chapter 13 repayment plan to address overdue payments over time, provided they meet applicable requirements.
Under the previous debt limits, some homeowners were unable to qualify for Chapter 13 because their combined financial obligations exceeded the statutory thresholds.
The new law could change that.
From the perspective of Van Horn Law Group, the increased debt ceiling is particularly important because it allows more individuals to explore bankruptcy restructuring without being automatically excluded solely because of the amount or composition of their qualifying debt.
However, meeting the debt threshold does not guarantee Chapter 13 eligibility or protection from foreclosure. Income, repayment ability, filing history, and other legal requirements must also be considered.
The Bankruptcy Threshold Adjustment Act also introduces an important change for small business owners.
The legislation increases the debt eligibility limit for Subchapter V of Chapter 11 bankruptcy from approximately $3.42 million to $7.5 million.
Subchapter V was created to make business restructuring more accessible to qualifying small businesses that may not have the resources to navigate traditional Chapter 11 proceedings.
The higher debt threshold means more eligible businesses may now be able to pursue this streamlined restructuring process.
What Are the Benefits of Subchapter V Bankruptcy?
Depending on the circumstances, Subchapter V may offer qualifying businesses several advantages, including:
For Florida business owners managing significant loans, commercial obligations, or other financial pressures, these changes may provide additional opportunities to reorganize debt while working toward long-term financial stability.
Not every business qualifies. Eligibility depends on several factors, including the nature of the business, its debt structure, and whether it meets federal statutory requirements.
One of the most important aspects of the Bankruptcy Threshold Adjustment Act is that the increased debt limits are permanent, rather than temporary.
Previous higher thresholds expired in June 2024, leaving some consumers and businesses unable to access bankruptcy procedures that had previously been available to them.
By restoring and permanently establishing higher limits, Congress has expanded access to restructuring options for qualifying debtors.
For bankruptcy attorneys like Chad Van Horn, understanding these changes is essential when evaluating the legal options available to individuals and businesses facing financial hardship.
The legislation also highlights an important distinction: bankruptcy is not always about eliminating debt. In many cases, it is about creating a manageable path forward.
Chapter 13 and Subchapter V can provide structured legal processes for addressing financial obligations while potentially preserving assets or business operations.
Although the legislation expands eligibility, it does not mean everyone carrying less than $2.75 million in debt automatically qualifies for Chapter 13 bankruptcy.
Likewise, businesses with less than $7.5 million in debt are not automatically eligible for Subchapter V.
Bankruptcy eligibility depends on several factors, including:
Individuals considering bankruptcy should also understand the differences between Chapter 7 and Chapter 13, including how each may affect their property, debts, and financial future.
An experienced bankruptcy attorney can help determine which options may be available based on a person’s unique financial situation.
As the founding attorney of Van Horn Law Group, Chad Van Horn works in an area of law that directly affects the financial futures of individuals, families, and businesses.
Changes such as the Bankruptcy Threshold Adjustment Act demonstrate why it is important to seek guidance from attorneys who understand federal bankruptcy law and how new legislation may affect eligibility.
For Florida consumers previously told they carried too much debt to qualify for Chapter 13, the new law may warrant a fresh evaluation of their circumstances.
The same is true for small business owners who previously exceeded the debt limits for streamlined Chapter 11 restructuring.
While bankruptcy is not the right solution for everyone, understanding the protections and restructuring opportunities available under federal law can be an important first step toward financial recovery.
If you are struggling with overwhelming debt, facing foreclosure, or experiencing financial difficulties with your business, recent changes to bankruptcy law may have expanded your options.
At Van Horn Law Group, we help Florida individuals, families, and business owners understand their bankruptcy options and explore potential solutions for financial relief.
Whether you are considering Chapter 7, Chapter 13, or Chapter 11 bankruptcy, our team can help you evaluate your circumstances and determine possible next steps.
Don’t assume your debt is too high to qualify for bankruptcy protection. The law has changed, and your options may have changed with it.
Contact Van Horn Law Group today to schedule a free consultation and learn more about your options under the new Bankruptcy Threshold Adjustment Act.
Visit VanHornLawGroup.com to get started.
Disclaimer: This article is provided for general informational purposes and does not constitute legal advice. Bankruptcy eligibility and available legal protections depend on individual circumstances and applicable law.
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