Small businesses in Fort Worth with debts up to $7.5 million could soon qualify for Subchapter V, a streamlined form of Chapter 11 bankruptcy reorganization, under legislation awaiting President Trump's signature. The change, reported by The Dallas Morning News, would restore debt limits that expired in June 2024 and make them permanent. Leinart Law Firm, a Texas-based bankruptcy practice, advises business owners whose debts exceed the current threshold to review their options now.
The bill's impact could be significant for companies that have been shut out of Subchapter V since the higher limits lapsed. Currently, the small business debt ceiling for Subchapter V is approximately $3.4 million. The proposed legislation would raise that to $7.5 million, opening the door for more businesses to use a faster, less expensive alternative to a traditional Chapter 11 case. For sole proprietors whose business debts are in their own names, the bill would also consolidate Chapter 13 limits: separate caps of $526,700 for unsecured debt and $1,580,125 for secured debt would become a single $2,750,000 limit.
"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."
Business owners with debts between the current and proposed limits face a strategic decision: wait for the bill to become law, or file now under existing rules. Waiting could make Subchapter V available, but delay carries risks. Creditor lawsuits, bank garnishments, and scheduled withdrawals under merchant cash advance agreements can rapidly deplete the cash a reorganization depends on. For owners who would rather close the business, a Chapter 7 case remains an option, in which a trustee liquidates company assets.
The legislation arrives amid a surge in small business bankruptcy filings. 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. If the bill is signed, the new limits would apply only to cases filed on or after the enactment date, meaning timing could determine whether a business qualifies for Subchapter V.
For Fort Worth business owners, the pending change underscores the importance of understanding available bankruptcy options. Those unsure whether their business qualifies today can consult a bankruptcy lawyer to evaluate their debt structure and plan a filing strategy that accounts for the potential new limits. As the bill awaits the President's signature, the decisions made in the coming weeks could shape the financial future of many small businesses across North Texas.
