S. 3977 – Bankruptcy Threshold Adjustment Act of 2026

AI-Generated Summary

Updated August 4, 2026 at 6:21 AM UTC

The Bankruptcy Threshold Adjustment Act of 2026 changes the debt limits that determine who can file for bankruptcy. It raises the maximum amount of debt a small business can have and still qualify for certain bankruptcy relief, and it also increases the debt ceiling for individuals (and their spouses) filing under Chapter 13. The changes affect small‑business owners, individual debtors, and the courts that handle their cases.

Key Provisions

Sets a new small‑business debt limit of $7.5 million for debtors whose at least half of the debt comes from their commercial activities, while excluding large affiliated groups, publicly reporting corporations, and their affiliates.
Allows individuals (or their spouses) with regular income to file Chapter 13 if their total non‑contingent, liquidated debts are under $2.75 million, but bars stockbrokers and commodity brokers from this relief.
Applies the new limits to any bankruptcy case that begins on or after the law’s enactment.

Legislative Activity

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6 earlier actions

HouseFloor Latest Action

Held at the desk.

August 10, 2026 • 11:11 AM

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SenateIntro Referral

Introduced in Senate

March 3, 2026

SenateCalendars

Introduced in the Senate. Read the first time. Placed on Senate Legislative Calendar under Read the First Time.

March 3, 2026

SenateCalendars

Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 347.

March 4, 2026

SenateFloor

Passed Senate without amendment by Unanimous Consent. (consideration: CR S4412; text: CR S4412)

August 3, 2026

SenateFloor

Message on Senate action sent to the House.

August 10, 2026

HouseFloor

Received in the House.

August 10, 2026 • 11:02 AM

HouseFloor

Held at the desk.

August 10, 2026 • 11:11 AM

Floor Debate

3 members

What members said about S. 3977 on the floor

3 Republicans

Sen. Jerry MoranR-KS · Aug 3, 2026

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 347, S. 3977. I now ask unanimous consent that the bill be considered read a third time…

Sen. Joni ErnstR-IA · Mar 3, 2026

I understand there is a bill at the desk, and I ask for its first reading. I now ask for a second reading, and in order to place the bill on the calendar under the provisions of rule XIV, I object to…

Sen. John ThuneR-SD · Mar 4, 2026

Mr. President, I understand there is a bill at the desk due for a second reading. Mr. President, in order to place the bill on the calendar under the provisions of rule XIV, I would object to further…

Bill Text

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Engrossed in SenateIssued August 3, 2026

119th CONGRESS

2d Session

S. 3977

AN ACT

To amend title 11, United States Code, to modify certain bankruptcy eligibility requirements, and for other purposes.

1.

Short title

This Act may be cited as the Bankruptcy Threshold Adjustment Act of 2026.

2.

Debt limit modifications

(a)

Modification to the small business bankruptcy debt limit

Section 1182(1) of title 11, United States Code, is amended to read as follows:

(1)

Debtor

The term debtor—

(A)

subject to subparagraph (B), means a person engaged in commercial or business activities (including any affiliate of such person that is also a debtor under this title and excluding a person whose primary activity is the business of owning single asset real estate) that has aggregate noncontingent liquidated secured and unsecured debts as of the date of the filing of the petition or the date of the order for relief in an amount not more than $7,500,000 (excluding debts owed to 1 or more affiliates or insiders) not less than 50 percent of which arose from the commercial or business activities of the debtor; and

(B)

does not include—

(i)

any member of a group of affiliated debtors under this title that has aggregate noncontingent liquidated secured and unsecured debts in an amount greater than $7,500,000 (excluding debt owed to 1 or more affiliates or insiders);

(ii)

any debtor that is a corporation subject to the reporting requirements under section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); or

(iii)

any debtor that is an affiliate of a corporation described in clause (ii).

.

(b)

Modification to the consumer bankruptcy debt limit

Section 109 of title 11, United States Code is amended by striking subsection (e) and inserting the following:

(e)

Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated debts that aggregate less than $2,750,000 or an individual with regular income and such individual’s spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontingent, liquidated debts that aggregate less than $2,750,000 may be a debtor under chapter 13 of this title.

.

3.

Effective date

The amendments made by this Act shall apply to any case that is commenced under title 11, United States Code, on or after the date of enactment of this Act.

Passed the Senate August 3, 2026.

Secretary