S. 3977: Bankruptcy Threshold Adjustment Act of 2026
Sponsor
Chuck Grassley
Republican · IA
Bill Progress
Latest Action · Mar 4, 2026
Read the second time. Placed on Senate floor schedule under General Orders. Calendar No. 347.
More debtors could qualify for bankruptcy relief
Why it matters
$7.5 million for small businesses. $2.75 million for households. Those are the new debt ceilings in S. 3977, which would let more borrowers use Subchapter V or Chapter 13 instead of costlier bankruptcy routes.
S. 3977 is a line-drawing bill with big consequences. It raises the debt limit for small businesses using Subchapter V to $7,500,000 and raises the Chapter 13 limit for consumers to less than $2,750,000.
For business owners, that means a larger company can still qualify for the small-business bankruptcy track — as long as at least 50% of its debt came from business activity. Debt owed to affiliates or insiders would not count toward the $7.5 million cap.
For households, the bill lets an individual with regular income file under Chapter 13 with less than $2.75 million in liquidated debt. Married couples filing together would use that same combined cap.
The bill also keeps some bright lines. Single-asset real estate operators stay out of the small-business track. Public companies and their affiliates stay out too. Stockbrokers and commodity brokers still cannot use Chapter 13.
If S. 3977 becomes law, the new limits would apply to bankruptcy cases filed after enactment.
S. 3977 Bill Summary
What S. 3977 actually does.
Small businesses get a higher Subchapter V ceiling
S. 3977 would let a qualifying business use Subchapter V with up to $7,500,000 in total qualifying debt, measured when the case is filed.
Business debt has to actually be business debt
To use the small-business track, at least 50% of the debtor's debt must come from commercial or business activity.
Insider debt does not count toward the cap
Debt owed to affiliates or insiders would be excluded when calculating whether a business is under the $7.5 million threshold.
More households could use Chapter 13
An individual with regular income could qualify for Chapter 13 with less than $2,750,000 in liquidated debt, and married couples could qualify under that same combined cap.
Some filers still stay out
The bill keeps exclusions for single-asset real estate businesses, public reporting companies and their affiliates, plus stockbrokers and commodity brokers.
The new limits start with future filings
The higher thresholds would apply to bankruptcy cases filed on or after the bill becomes law.
Who benefits from S. 3977?
Small-business owners carrying up to $7.5 million in debt
If you run an operating business and your total qualifying debt is at or below $7,500,000, S. 3977 could let you use the small-business bankruptcy track instead of a more complex Chapter 11 case.
Households with regular income but larger debt loads
If your debts are too high for today's Chapter 13 limit but still below $2,750,000, this bill could reopen Chapter 13 as an option.
Married couples filing together
Spouses with combined debts under $2,750,000 could still use Chapter 13 together, which matters for households juggling mortgages, business guarantees, medical debt, and credit lines.
Business owners with insider or affiliate loans
If part of your debt is money owed to related parties, those balances would not count toward the $7.5 million Subchapter V ceiling.
Who is affected by S. 3977?
Single-asset real estate operators
If your main business is owning a single real-estate asset, S. 3977 would not let you into the small-business bankruptcy track.
Larger affiliated business groups
If your group of affiliated debtors is above $7,500,000 in combined qualifying debt, the small-business pathway would still be closed.
Public companies and their affiliates
Businesses that file public reports with the SEC, and their affiliates, would remain excluded from Subchapter V under this bill.
Stockbrokers and commodity brokers
Even with the higher Chapter 13 ceiling, these filers would still be ineligible.
What Congress Is Saying
S. 3977 has come up 5 times in the Congressional Record so far.
S. 3977 also appeared in 2 more Senate floor references and 1 routine cosponsor filing.
S3977 Legislative Journey
Action Taken
Mar 4, 2026
Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 347.
Introduced
Mar 3, 2026
Introduced in the Senate. Read the first time. Placed on Senate Legislative Calendar under Read the First Time.
+1 more action this day
About the Sponsor
Chuck Grassley
Republican, IA · 51 years in Congress
Committees: the Judiciary, Finance, the Budget
View full profile →
Cosponsors (5)
This bill has 5 cosponsors: 3 Democrats, 2 Republicans, reflecting bipartisan support. Cosponsors represent 5 states: Delaware, Illinois, Rhode Island, and 2 more.
S. 3977 Quick Facts
- Chamber
- Senate
- Policy
- Finance and Financial Sector
- Introduced
- Mar 3, 2026
Read the second time. Placed on Senate floor schedule under General Orders. Calendar No. 347.
Mar 4, 2026
Official Sources
Official Congress.gov page for the Bankruptcy Threshold Adjustment Act of 2026, including status, text, and actions.
Official U.S. Code section defining the Subchapter V small-business debtor criteria that S. 3977 would amend.
Official U.S. Code section covering who may be a debtor, including the Chapter 13 eligibility rule changed by the bill.
Judiciary overview of bankruptcy chapters and filing basics, useful background for understanding Subchapter V and Chapter 13.
Official court explanation of Chapter 13 reorganization for individuals with regular income, directly relevant to the bill's household debt limit change.
SEC material related to Exchange Act reporting obligations under sections 13 and 15(d), which the bill uses to exclude public reporting companies from Subchapter V.
S. 3977 Common Questions
What does S. 3977 do?
It raises two bankruptcy eligibility limits: up to $7,500,000 for qualifying small-business Subchapter V cases and less than $2,750,000 for Chapter 13 household cases.
How much debt could a small business have under S. 3977?
Up to $7.5 million in qualifying debt. S. 3977 also says at least 50% of that debt must come from business activity, not personal obligations.
How much debt could you have for Chapter 13 under S. 3977?
Less than $2,750,000 in liquidated debt if you have regular income. That same combined cap would also apply to married couples filing together.
Would debt owed to insiders count toward the $7.5 million cap?
No. S. 3977 says debt owed to affiliates or insiders would be excluded when measuring the small-business debt limit.
Can a real estate holding company use the higher small-business limit?
Not if its primary activity is owning single-asset real estate. S. 3977 keeps that exclusion in place.
Would public companies qualify for the new Subchapter V limit?
No. S. 3977 keeps public reporting companies — and their affiliates — out of the small-business bankruptcy track.
Do stockbrokers or commodity brokers get the higher Chapter 13 cap?
No. Even with the new $2.75 million ceiling, those two categories would still be ineligible for Chapter 13.
When would the new bankruptcy limits take effect?
Right away for future cases. S. 3977 says the higher limits would apply to bankruptcy filings made on or after the date it becomes law.
Based on S. 3977 bill text
S. 3977 Bill Text
“To amend title 11, United States Code, to modify certain bankruptcy eligibility requirements, and for other purposes.”
Source: U.S. Government Publishing Office
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