Bill would set debt limits for two bankruptcy paths

Business debtors would have to meet a $7.5 million debt cap and a business-debt test. It covers people and organizations in business, including affiliates that are also bankruptcy debtors, but not those mainly owning single-asset real estate. Counted secured and unsecured debts must have a fixed amount, not depend on a future event, and total no more than $7.5 million when measured; debts to affiliates or insiders are left out. At least half of the counted debts must come from business activity. The definition excludes members of affiliated debtor groups over the cap, corporations required to file federal securities reports, and those corporations’ affiliates. These rules would apply to bankruptcy cases begun on or after enactment.

Chapter 13 applicants would have to owe less than $2.75 million in counted debts. The limit covers individuals with regular income and individuals filing with their spouses. Counted debts must have a fixed amount and not depend on a future event. Stockbrokers and commodity brokers would not qualify. These rules would apply to bankruptcy cases begun on or after enactment.