Bankruptcy Threshold Adjustment and Technical Corrections Act

Mr. Speaker, I move to suspend the rules and pass the bill (S. 3823) to amend title 11, United States Code, to modify the eligibility requirements for a debtor under chapter 13, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material on S. 3823.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank Senator Durbin and Senator Grassley for their work on this bill. I also thank my colleague on the other side of the aisle, Representative Cline, for being the Republican lead on the bill.

The Bankruptcy Threshold Adjustment and Technical Corrections Act shows that we can still come together in a bipartisan and bicameral way and make commonsense changes to the law that help small businesses on Main Street and everyday Americans.

Before the COVID-19 pandemic, Mr. Speaker, many sole proprietors and middle-class families who live in high cost-of-living areas were ineligible to receive chapter 13 bankruptcy protections because the debt limits were far too low. For families forced into bankruptcy who wanted to keep their homes, vehicles, or any essential property, and were willing to pay off their debts under court supervision, chapter 13 is their only lifeline. The alternative for these families can be devastating. Many have lost everything, including their homes.

The story is similar for small businesses. In 2019, the American Bankruptcy Institute's Commission on Consumer Bankruptcy found that the artificially low chapter 13 limits were driving people away from the relief that they needed, and they called on this Congress to act.

Sole proprietors who could otherwise save their businesses and protect their families have been forced to liquidate everything because they exceeded the debt limits of chapter 13.

The Small Business Reorganization Act of 2019, the SBRA, as the Speaker pro tempore knows, created subchapter V in chapter 11 bankruptcy, a voluntary option for small businesses in need of expedited bankruptcy relief. But that low debt limit meant that many small businesses simply could not take advantage of the program.

The travesty of the pandemic really brought the need to increase these debt limits into stark relief. The CARES Act raised the debt limit threshold under the SBRA. That was done on a bipartisan basis by this House. It provided important protections to families and homeowners, but those provisions were temporary.

My office has been contacted by countless professionals from all over the bankruptcy community expressing the need for this legislation. The National Conference of Bankruptcy Judges, an association of the bankruptcy judges of the United States, has said that the SBRA was one of the best modifications to the Bankruptcy Code in recent years. It assisted nearly 3,000 small businesses across the country that were in need of expedited relief through the pandemic. The Office of the United States Trustee Program also reported that more than half of these small business debtors received successful outcomes through a confirmed reorganization plan in 6 months or less.

Despite the success of this program, the debt limit increase under the SBRA expired earlier this year, just a few months ago, on March 27, 2022, which created an environment of uncertainty and unpredictability within the bankruptcy arena. Today's legislation retroactively restores that higher debt limit and extends it for another 2 years, allowing more businesses to take advantage of these protections under court supervision.

This bill passed the Senate by unanimous consent, and I certainly hope that we can get a similar level of bipartisan support here in the House. This bill will make a big difference by allowing families to keep their homes, vehicles, and livelihoods intact while they repay their debt.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the distinguished gentlewoman from Texas (Ms. Jackson Lee).

Mr. Speaker, I am prepared to close and I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time. I will simply close by first thanking the distinguished chairwoman from Texas (Ms. Jackson Lee), who is always so articulate and I am grateful for her leadership and kind remarks.

I also thank Mr. Cicilline, the chairman of the subcommittee of jurisdiction, whose leadership was pivotal; and as I mentioned before, my Senate partners and Representative Cline.

At the end of the day, I think we have a real opportunity today to honor American ingenuity, entrepreneurship, and innovation by providing our small businesses across the United States in Main Street after Main Street with the opportunity and the tools that they need to be able to survive.

Mr. Speaker, I think this bill is a small step in that direction. It is bipartisan. It passed the Senate unanimously, and I certainly hope that it will pass this Chamber unanimously as well.

Mr. Speaker, I urge my colleagues to support the bill, and I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, S. 3823 would make modest and temporary changes to the U.S. Bankruptcy Code.

First, the bill temporarily increases debt limits for small business debtors under subchapter V of chapter 11 and for individual debtors reorganizing debt under chapter 13.

Subchapter V of the Bankruptcy Code is a lower cost reorganization bankruptcy option for small businesses. These businesses don't have deep pockets, and traditional, expensive chapter 11 reorganizations may not be feasible.

Subchapter V is a more affordable and streamlined approach, which can lead to more successful reorganizations. That means that both debtors and creditors should be better off because, hopefully, less of the debtor's estate will go toward professional fees and more will be left for the debtor's business and, ultimately, the creditors.

Subchapter V took effect in February 2020. At that time, the debt limit for those wishing to utilize this more streamlined law was just over $2.7 million. Due in part to expected trouble for small businesses, the CARES Act and later legislation temporarily increased the debt limit for subchapter V filers to $7.5 million. That temporary increase sunsetted in March of this year. This bill again extends the $7.5 million debt limit for another 2 years.

Likewise, the bill also changes the bankruptcy debt limits for chapter 13, which is a way for eligible individuals, including sole proprietors, to reorganize their debts. The bill removes the distinction between secured and unsecured debt limits under chapter 13 and increases the overall debt limit for those who wish to file for their individual protection from about $1.9 million to $2.75 million.

Like the adjustment to subchapter V, these changes to chapter 13 apply for only 2 years. Put simply, Americans are having a harder time making ends meet due to what I think we would agree are mistakes made under the Biden administration and Democrats in control of Congress.

Raising the debt limit will allow those suffering from these failed policies to adjust their debts to fit the new

realities of our economy, skyrocketing energy and input costs, not enough workers, and more. A successful reorganization can leave both debtors and creditors better off.

At the same time, we just don't have certain data about some of these bankruptcy policy changes or their likely long-term effects. That is why these changes to our Bankruptcy Code should be temporary.

An additional 2 years of normal post-pandemic bankruptcy activity will give us a better understanding of the underlying policy issues and will help guide the future design of our bankruptcy system.

It is also worth noting that this bill did not go through regular order in the Judiciary Committee, so it did not benefit from robust oversight or legislative hearings. Americans are best served when Federal policy is made after careful and focused congressional deliberation, something that would have occurred in regular order.

The bill makes clarifications to small business bankruptcies that relate to eligibility, trustee responsibilities, and bankruptcy plan requirements. These would be permanent. The bill also makes accounting- related clarifications that will operate to improve the U.S. Trustee System Fund.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. President, I wish to submit to the Senate a budget scorekeeping report. The report, which covers fiscal year 2022, was prepared by my staff on the Budget Committee and the Congressional Budget Office pursuant to section 308(b) and in aid of section 311 of the Congressional Budget Act of 1974, as amended. This information allows the Senate Budget Committee to determine if budgetary points of order lie against pending legislation.

The report shows the effect on spending and revenues of congressional action through September 15, 2022, as compared to the levels the Senate agreed to in the budget resolution for fiscal year 2022, S. Con. Res. 14. Since my last scorekeeping report on April 28, seven laws with significant budgetary effects have been signed by the President, and I have revised the levels in the budget resolution two times for legislation.

The Democratic staff of the Budget Committee prepared tables 1 and 2. Table 1 compares the mandatory spending of each authorizing committee against the enforceable allocations under section 302 of the Congressional Budget Act. It shows 10 of the 16 authorizing committees are in compliance with their allocations, either because no legislation with significant budgetary costs was enacted or the legislation qualified under the budget resolution for an allocation adjustment. Most of the spending above allowable levels is attributed to either the CHIPS Act of 2022 or the Honoring our PACT Act of 2022.

Table 2 shows the Senate pay-as-you-go--PAYGO--scorecard tallying enacted legislation with significant effects on mandatory spending and revenues. The scorecard shows a savings of $4.7 billion in 2022, a deficit of $174 billion over the 2022-2026 period, and a deficit of $528 billion over the 2022-2031 period. When compared to the allowable amounts on the PAYGO scorecard last adjusted on September 12, there is a deficit of $1.3 billion on the scorecard for 2022, $185 billion over the 2022-2026 period, and $667 billion over the 2022-2031 period.

In addition to these tables, I am submitting a letter from the Congressional Budget Office with further detail. For fiscal year 2022, current budgetary levels are within allowed amounts. Current law budget authority is $2.6 billion below the maximum allowed in the revised budget resolution, outlays are $17 billion below the allowed maximum, and revenues are $68 million above the allowed minimum. The tables also show that there has been no net change for Social Security.

I ask unanimous consent that the letter and accompanying tables from CBO be printed in the Congressional Record.

Mr. Speaker, I thank the distinguished member of our committee, Mr. Neguse, for his leadership joining with the Senate, and I thank him for yielding, Mr. Speaker.

This is a fresh start. This is a new opportunity in important bipartisan, bicameral legislation that Mr. Neguse has nurtured and introduced and will ensure, under his leadership, that our bankruptcy system works for the entrepreneurs, small businesses, homeowners, and American families, who are the backbone of this country and of the communities where they live and work.

Having the privilege of having served on the Judiciary Committee for some time, I am reminded of the work that we have done, almost like a puzzle putting together a better matrix for the American people to be able to renew their lives even as they may have the necessity of filing for bankruptcy.

If there is one fundamental principle of American bankruptcy law, it is the promise of a fresh start, and the fresh start is quintessentially an American idea. It is a promise that even when your best efforts have failed, you are not a failure, and you will have a chance to get back up and try again. It is a promise that your debts will not destroy you.

Increasing the debt limit for small businesses electing to file for bankruptcy under subchapter V of chapter 11 to $7.5 million is long overdue.

Mr. Speaker, I particularly thank Mr. Neguse because really small businesses across America have been raising this question, making the point that it is impossible for them to survive with the previous cap for individual chapter 11 filers of $2.75 million.

This legislation will provide much-needed certainty that the bankruptcy system will be responsive to hardworking Americans and their families trying to stay afloat in a world that can be turned upside down by global economic shocks.

Just as I started, again, the filing of bankruptcy should not cause one to never renew again. This legislation, with the leadership of Mr. Neguse, gives our American businesspersons, homeowners, and others a fresh start.

I ask my colleagues to support this legislation.

Mr. Speaker, I rise in strong support of S. 3823, the ``Bankruptcy Threshold Adjustment and Technical Corrections Act.''

This important bipartisan, bicameral legislation introduced by my colleague, Congressman Neguse, will ensure that our bankruptcy system works for the entrepreneurs, small businesses, homeowners, and American families who are the backbone of this country and of the communities where they live and work.

If there is one foundational principle of American bankruptcy law, it is the promise of the ``fresh start.'' The fresh start is a quintessentially American idea. It is the promise that even when your best efforts have failed, you will have a chance to get back up and try again. It is the promise that your debts will not destroy you.

By increasing the debt limit for small businesses electing to file for bankruptcy under subchapter V of Chapter 11 to $7.5 million, and for individual Chapter 13 filers to $2.75 million, this legislation will provide much-needed certainty that the bankruptcy system will be responsive to hardworking Americans and their families trying to stay afloat in a world that can get turned upside down by global economic shocks.

We all benefit from the fresh start. When it works as intended, it boosts economic growth, reduces unemployment, and encourages innovation and entrepreneurship. This legislation represents a major step toward ensuring that our bankruptcy system makes good on that promise.

I thank my colleagues, Representatives Neguse and Cline, for their leadership on this bill and for their work to ensure that small businesses and families have meaningful access to the bankruptcy process.

I urge my colleagues to support S. 3823.