Sub V Chapter 11 bankruptcy case Debt ‘Cap’ in Peril of Reverting from present 7.5 million cap, to About $3 Million and Chapter 13 bankruptcy case debt ‘Cap’ Will Revert to Old (lower) limits, unless Congress passes extension bill by 6/21/24
The debt limits for Subchapter V and chapter 13 will expire on June 21, 2024, but a bill to extend the existing caps for two more years is being blocked by one senator.
In April, a bipartisan group of senators from the Senate Judiciary Committee (consisting of Sens. Richard Durbin (D-Ill.), Lindsey Graham (R-S.C.), Sheldon Whitehouse (D-R.I.), Charles Grassley (R-Iowa), Christopher Coons (D-Del.) and John Cornyn (R-Texas)) introduced S. 4150, the Bankruptcy Threshold Adjustment Extension Act, to push the sunset dates out to 2026. It is a one-sentence bill.
Due to its simplicity and perceived lack of opposition, the sponsors had hoped to advance the bill swiftly through the Senate via unanimous consent before sending it to the House of Representatives. However, one senator has raised an issue with the legislation by placing a hold on the bill and has steadfastly refused to remove it.
Without a viable path through the Senate, it is unlikely that the bill could be sent to President Biden’s desk before the sunset occurs, given that the House is in recess next week.
Absent a legislative fix, the debt limits will revert to the amounts in effect in early March 2020, subject to adjustment for inflation. The Subchapter V debt limit will drop from $7,500,000 to $3,024,725, and the chapter 13 threshold of $2,750,000 for both secured and unsecured debt will revert to a two-part test limiting eligibility to a maximum of $465,275 for unsecured debt and $1,395,875 for secured debt.