A bill awaiting President Trump's signature would restore and make permanent higher debt limits for Subchapter V, a streamlined form of Chapter 11 reorganization, according to The Dallas Morning News. The change would open the door for more Fort Worth small businesses to use a faster, less expensive bankruptcy option, but owners must act strategically because the new limits would apply only to cases filed on or after enactment.
Currently, Subchapter V is available to small businesses with debts up to about $3.4 million. The bill would raise that ceiling to $7.5 million, a significant increase that could help companies that previously had to navigate the more complex and costly full Chapter 11 process. For sole proprietors whose business debts are in their own names, the bill would also simplify Chapter 13 eligibility by replacing separate caps of $526,700 for unsecured debt and $1,580,125 for secured debt with a single $2,750,000 limit. According to Leinart Law Firm, a Fort Worth-based bankruptcy practice, business owners with debts exceeding the current limit should 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 Leinart Law Firm. "We review the full debt picture with an owner, including personal guarantees, before recommending a chapter or a filing date."
For a business with debts between the current and proposed limits, waiting for the bill's signature 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. 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 limit, according to Epiq AACER. The Northern District of Texas, which hears Fort Worth cases, ranks among the nation's busiest bankruptcy courts. This combination of rising filings and a pending expansion means more small businesses may soon qualify for relief, but the decision of when to file is complex.
Eligibility under Subchapter V depends on multiple factors, including the total amount of debt, whether it is secured or unsecured, and whether personal guarantees are involved. An owner can ask a bankruptcy lawyer to evaluate whether the business qualifies today and how the pending change might affect the timing of a filing. If the bill becomes law, companies that previously fell just outside the limit could gain access to a more efficient path to reorganization, potentially preserving jobs and allowing owners to retain control. However, those who wait too long may find that creditor actions have already undermined their ability to restructure.
For Fort Worth small business owners carrying debt above the current threshold, the pending legislation represents both an opportunity and a deadline. Understanding the nuances of Subchapter V, Chapter 13, and Chapter 7 is essential to making an informed choice that aligns with the company's financial reality and long-term goals.
