Quick Answer
The Bankruptcy Threshold Adjustment Act (H.R. 7730), signed by the President on November 10, 2026 (White House), changes two limits for cases filed on or after that date:
- Subchapter V (small business Chapter 11): the debt limit rises from $3,424,000 to $7,500,000.
- Chapter 13: the old separate caps ($526,700 unsecured and $1,580,125 secured) become one limit: an individual (or an individual and spouse) with regular income may file if total noncontingent, liquidated debts are under $2,750,000.
For Delaware businesses, including the many LLCs and corporations formed under Delaware law, and for their owners, more people can now consider a reorganization in the U.S. Bankruptcy Court for the District of Delaware. The enacted text has no sunset.
Subchapter V: Small Business Limit Rises to $7.5 Million
What is Subchapter V?
Subchapter V is a streamlined version of Chapter 11 for smaller businesses. Compared with a traditional Chapter 11, it generally offers:
- No creditors’ committee unless the court orders one.
- A Subchapter V trustee who helps facilitate a plan, while the owners usually keep running the business.
- Only the debtor can file a plan, generally within 90 days of filing.
- A path to keep ownership. A plan can be confirmed without creditor votes if it meets the legal requirements, including committing projected disposable income for three to five years.
- No U.S. Trustee quarterly fees.
See our Subchapter V Bankruptcy page and the U.S. Trustee Program’s Subchapter V page.
Who qualifies under the new § 1182(1)
A Subchapter V debtor is a person engaged in commercial or business activities whose total noncontingent, liquidated secured and unsecured debts are not more than $7,500,000, at least 50% of which arose from business activities.
- Affiliates count together. A group of affiliated debtors over $7,500,000 does not qualify.
- Insider and affiliate debts are excluded from the total.
- Not eligible: businesses whose primary activity is owning single asset real estate, companies subject to SEC reporting under section 13 or 15(d) of the Securities Exchange Act of 1934, and their affiliates.
The previous $3,424,000 limit took effect April 1, 2025 (Federal Register). A temporary $7,500,000 limit expired in 2024, according to the Congressional Research Service summary on Congress.gov.
Hypothetical example 1: Wilmington family business
Hypothetical, for illustration only. A Wilmington manufacturer, organized as a Delaware LLC, owes $4,800,000 to its bank, equipment lessors and suppliers. That exceeded the old $3,424,000 cap, leaving only a traditional Chapter 11. Now it may qualify for Subchapter V.
Hypothetical example 2: Company with a large insider loan
Hypothetical, for illustration only. A Dover company owes $6,000,000 to outside creditors and $2,000,000 to its owner. Because insider debts are excluded, the relevant figure is $6,000,000, under the new limit.
Chapter 13: A $2.75 Million Combined Limit for Delaware Owners and Individuals
Under the new 11 U.S.C. § 109(e), secured and unsecured debts are added together, and the total must be under $2,750,000. Chapter 13 is for individuals only, not companies. It lets you keep property, such as a home, and repay creditors through a three- to five-year plan. For a Delaware business owner, Chapter 13 can address personal guarantees, a mortgage and other personal debts, while the business is handled separately. A sole proprietor’s business debts can be included.
Hypothetical example 3: Owner who guaranteed company debt
Hypothetical, for illustration only. The owner of a New Castle County restaurant group guaranteed $2,000,000 of company loans and has a $500,000 home mortgage. Under the old rules, the guaranty far exceeded the $526,700 unsecured cap. If the guaranty is noncontingent and liquidated, the owner’s total of about $2,500,000 is under the new limit, so Chapter 13 may now be available. Because most of the debt is business debt, Subchapter V may also be worth comparing.
Each example depends on details such as which debts are disputed or contingent, how affiliates are structured and whether the business is still operating.
How Chapter 7 Compares
Chapter 7 has no debt limit. A trustee liquidates non-exempt assets. Individuals can receive a discharge of most qualifying debts; a company in Chapter 7 does not receive a discharge and typically closes.
Why Delaware
Delaware entities may file in the District of Delaware, which has extensive experience with business reorganizations. Learn more about our Delaware bankruptcy practice. Jenny R. Kasen has appeared before the U.S. Bankruptcy Court for the District of Delaware for more than thirteen years and is also admitted in New Jersey, Pennsylvania and Florida.
What to Do Now
- List business debts, separating insider or affiliate debts, and list your personal debts and guarantees.
- Note deadlines: lawsuits, judgments, levies, lease defaults or foreclosure.
- Collect recent financial statements and tax returns.
- Talk to counsel before filing. The new limits apply only to cases filed on or after November 10, 2026.
Frequently Asked Questions
What is the new Subchapter V debt limit?
$7,500,000 in total noncontingent, liquidated secured and unsecured debts, excluding debts owed to affiliates or insiders, with at least 50% arising from business activities. It applies to cases filed on or after November 10, 2026.
What is the new Chapter 13 debt limit?
An individual (or an individual and spouse) with regular income may file Chapter 13 if total noncontingent, liquidated debts are under $2,750,000. Secured and unsecured debts are counted together.
Are the new limits permanent?
The enacted text has no sunset date. The White House described the law as permanently raising the thresholds.
My business filed a traditional Chapter 11 before November 10, 2026. Does the new limit apply?
The new limits apply to cases commenced on or after the date of enactment. Whether an existing case can change course is a question to discuss with counsel.
Can a single-member Delaware LLC use Subchapter V?
Yes, if it is engaged in commercial or business activities and meets the debt tests. A company whose primary activity is owning single asset real estate is not eligible.
Does Chapter 13 work for a business?
No. Chapter 13 is only for individuals. A sole proprietor’s business debts can be part of an individual Chapter 13 case if total debts are under $2,750,000.
Should a Delaware business owner choose Subchapter V or Chapter 13?
It depends. Subchapter V can restructure the business, or an owner engaged in business, with mostly business debt up to $7,500,000. Chapter 13 may be simpler for an individual with regular income and total debts under $2,750,000.
Schedule a Consultation
If your Delaware business or your personal guarantee is under pressure and you want to know whether Subchapter V or Chapter 13 now fits, call (302) 214-0777, email [email protected], or visit our contact page to schedule a consultation. Our office is at 1213 N. King Street, Suite 2, Wilmington, DE 19801, and office hours are 9:00 a.m. to 5:00 p.m.
Sources
- The White House, Congressional Bills H.R. 997, H.R. 1703, H.R. 1945, and H.R. 7730 Signed into Law (Nov. 10, 2026)
- S. Government Publishing Office, H.R. 7730 Enrolled Bill text
- gov, H.R. 7730, Bankruptcy Threshold Adjustment Act
- Federal Register, Revision of Certain Dollar Amounts in the Bankruptcy Code (effective April 1, 2025)
- S. Trustee Program, Subchapter V
Disclaimer
ATTORNEY ADVERTISING. This article is for informational purposes and is not legal advice. Reading it or contacting us does not create an attorney-client relationship. Every situation is different, and the outcome of any matter depends on its own facts. Delaware Bankruptcy Attorney is a trade name of Kasen Law Group, P.C. Jenny R. Kasen, Esquire, Wilmington, Delaware, is responsible for this content and is admitted in Delaware, New Jersey, Pennsylvania and Florida. Jenny R. Kasen is Certified by the American Board of Certification, an organization accredited by the American Bar Association. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.