Small businesses in Fort Worth with debts up to $7.5 million may soon qualify for Subchapter V, a streamlined form of Chapter 11 reorganization, if a bill awaiting President Trump's signature becomes law. Currently, the debt ceiling for Subchapter V is approximately $3.4 million, a limit that expired in June 2024 but was temporarily restored. The new bill would make the higher threshold permanent, according to The Dallas Morning News. For many business owners, this change could mean the difference between a costly, complex Chapter 11 case and a more efficient reorganization that allows them to keep operating.
Leinart Law Firm, a Fort Worth-based bankruptcy practice, advises business owners whose debts exceed the current limit to review 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 would also simplify debt limits for Chapter 13 filings. Separate caps of $526,700 for unsecured debt and $1,580,125 for secured debt would be replaced by a single $2,750,000 limit. This change could particularly help sole proprietors whose business debts are in their own names, allowing them to address both personal and business obligations in one case. Importantly, the new limits would apply only to cases filed on or after the bill's enactment, so timing is crucial.
For a business with debts between the current $3.4 million limit and the proposed $7.5 million cap, waiting for the signature might make Subchapter V available. However, delay carries risks. Creditor lawsuits, bank garnishments, and scheduled withdrawals under merchant cash advance agreements can rapidly deplete the cash a reorganization depends on. Owners who would rather close the business may instead use a Chapter 7 case, in which a trustee liquidates company assets.
The urgency is underscored by recent data. Subchapter V elections nationwide reached 302 in August, a 63 percent increase over August 2025, even under the lower debt limit, according to Epiq AACER. The Northern District of Texas, which hears Fort Worth cases, ranks among the nation's busiest bankruptcy courts. As more small businesses struggle with debt, the pending legislation could provide a vital lifeline, but only if owners act strategically. Consulting with a bankruptcy lawyer can help determine whether to file now under existing rules or wait for the new limits, balancing the need for immediate relief against the potential benefits of a higher threshold.
