Every three years on April 1st, the dollar amounts listed in the Bankruptcy Code are adjusted to account for inflation.
At its creation in 2019 and implementation in 2020, the debt limit for Chapter 11 Subchapter V bankruptcy was $7,500,000 of non-contingent, liquidated debt, which was then lowered on June 21st, 2024, to $3,024,725. This happened because Congress could not pass the Bankruptcy Threshold Adjustment Extension Act, which would’ve extended the debt limit increase through June 21st, 2026.
Now that April 1st, 2025, is soon upon us, the Judicial Conference has decreed that the debt limit will be increased to $3,424,000. This increase will be applied to cases filed on or after April 1st.
This planned increase will affect many aspects of Sub V bankruptcy, including but not limited to:
- The maximum amount of certain “priority” claims, such as for employee wages and deposits of certain undelivered products and services
- The minimum aggregate claims needed to file an involuntary bankruptcy petition
- The collective debt limits, which are used to determine which debtors qualify to file cases under Subchapter V of Chapter 11
It will also update various forms, such as:
- Official Form 106C, Schedule C: The Property You Claim as Exempt, Line 3; Committee Note
- Official Form 107, Statement of Financial Affairs for Individuals Filing for Bankruptcy, Line 6; Committee Note
- Official Form 122A-2, Chapter 7 Means Test Calculation, Lines 29 and 40; Committee Note
- Official Form 122C-2, Chapter 13 Calculation of Your Disposable Income, Line 29; Committee Note
- Official Form 201, Voluntary Petition for Non-Individuals Filing for Bankruptcy, Line 8; Committee Note
- Official Form 207, Statement of Financial Affairs for Non-Individuals Filing for Bankruptcy, Lines 3 and 4; Committee Note
- Official Form 410, Proof of Claim, Line 12; Committee Note
If your business is struggling, Subchapter V bankruptcy could be the lifeline it needs, or if you’re seeking strategies to navigate and manage your business's debt more effectively, our attorneys are ready to assist you.
Talk to The Lane Law Firm today for more information or guidance from experienced business bankruptcy attorneys.
