A bill awaiting President Trump's signature would restore and permanently raise the debt limits for Subchapter V, a streamlined form of Chapter 11 reorganization, potentially opening it to more small businesses in Fort Worth. According to The Dallas Morning News, the legislation would increase the Subchapter V debt ceiling from $3,424,000 to $7,500,000, making the faster, less costly option available to companies with up to $7.5 million in debt.
Leinart Law Firm, a Fort Worth-based bankruptcy practice, advises business owners whose debts exceed the current limit to review their options now. Owners can ask a bankruptcy lawyer whether a business qualifies today and how the pending change affects the timing of a filing. The firm emphasizes that while waiting for the bill's enactment may make Subchapter V available, delay carries risks such as creditor lawsuits, bank garnishments, and scheduled withdrawals under merchant cash advance agreements that can deplete cash needed for reorganization.
The bill would also simplify Chapter 13 eligibility for sole proprietors. Separate caps of $526,700 for unsecured debt and $1,580,125 for secured debt would become a single $2,750,000 limit, which may help those whose business debts are in their own names. However, the new limits would apply only to cases filed on or after enactment, so timing is crucial.
"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 businesses that prefer to close the business, a Chapter 7 case remains an option, in which a trustee liquidates company assets. Subchapter V elections nationwide reached 302 in August, a 63 percent increase over August 2025, even under the lower limit, according to Epiq AACER data. The Northern District of Texas, which hears Fort Worth cases, ranks among the nation's busiest bankruptcy courts.
The implications for small business owners are significant. If the bill becomes law, more companies will have access to a reorganization tool that allows them to stay in business and repay debts over time, potentially saving jobs and preserving economic activity. For creditors, the expanded eligibility may lead to more negotiated repayments rather than liquidations. Attorneys and financial advisors should prepare for an uptick in Subchapter V filings, particularly in busy districts like Northern Texas.
Business owners with debts between the current and proposed limits face a strategic decision: file now under existing rules or wait for the new limits, risking creditor actions in the interim. Leinart Law Firm recommends a thorough review of all debts, including personal guarantees, to determine the best course. The firm, founded in 2005, helps individuals and small businesses across Texas resolve debt through various bankruptcy chapters.
As the bill awaits signature, the clock is ticking for those who could benefit. Careful planning with a qualified attorney can mean the difference between a successful reorganization and a forced closure.
