A bill awaiting President Trump’s signature would raise the debt limit for Subchapter V bankruptcy from approximately $3.4 million to $7.5 million, potentially opening the streamlined reorganization process to more small businesses in Fort Worth. According to The Dallas Morning News, the legislation would restore limits that expired in June 2024 and make them permanent. The change would apply only to cases filed on or after enactment.
Subchapter V, a faster and less expensive alternative to a traditional Chapter 11, allows business owners to keep operating while proposing a repayment plan. Currently, only businesses with debts below about $3.4 million qualify. The bill would increase that threshold to $7.5 million, giving more companies access to the option. Separately, Chapter 13 debt limits would be consolidated into a single $2,750,000 cap, replacing the current dual limits of $526,700 for unsecured debt and $1,580,125 for secured debt. That change may particularly help sole proprietors whose business debts are in their own names.
For businesses with debts between the current and proposed limits, waiting for the bill to become law could make Subchapter V available, but delay carries risks. Creditor lawsuits, bank garnishments, and scheduled withdrawals under merchant cash advance agreements can quickly deplete the cash a reorganization depends on. Leinart Law Firm, a Fort Worth-based practice, advises owners to evaluate their options now. “Subchapter V lets an owner keep running the business and propose a repayment plan without the expense of a full Chapter 11 case, but companies above the current limit cannot use it,” said Marcus Leinart, founder of the firm. “We review the full debt picture with an owner, including personal guarantees, before recommending a chapter or a filing date.”
The bill’s potential impact comes as Subchapter V elections are already rising. Nationwide, such filings reached 302 in August, a 63 percent increase over August 2025, even under the lower debt limit, according to Epiq AACER data. The Northern District of Texas, which includes Fort Worth, is among the busiest bankruptcy courts in the country. If the bill is signed, the higher threshold could prompt a surge in Subchapter V filings from businesses that previously had to choose between a more complex Chapter 11 or closing down.
Owners whose debts exceed the current limit but fall below the proposed cap may benefit from consulting a bankruptcy lawyer to determine whether they qualify today and how the timing of a filing could affect their case. For those who decide to shut down rather than reorganize, Chapter 7 liquidation remains an option, in which a trustee sells company assets to pay creditors. The decision involves weighing the cost of delay against the potential advantage of filing under the new limits. With the bill now awaiting the President’s signature, Fort Worth small business owners have a narrow window to plan their next steps.
