Congress Clears $7.5 Million Subchapter V Limit: What Businesses With MCA Debt Need to Know Before It’s Signed

CredibleLaw MCA news post | Publish Monday, October 5, 2026 | Call (888) 201-0441

The bill that would more than double the debt ceiling for small business bankruptcy is now one step from becoming law. On the night of September 28, 2026, the U.S. Senate passed H.R. 7730, the Bankruptcy Threshold Adjustment Act, by unanimous consent and without amendment. The House had approved the same bill by voice vote on September 16. With both chambers now agreeing on identical text, the bill goes to the President.

As of the morning of October 5, 2026, no signing has been reported. Until the President signs, or the bill otherwise becomes law under the Constitution, the Subchapter V debt limit remains $3,424,000. Businesses carrying stacked merchant cash advances (MCAs) should treat this as a planning window, not a finished change.

This update follows CredibleLaw’s earlier coverage of the House vote on the Subchapter V debt limit, which explained the bill’s terms, how MCA balances count toward eligibility, and the file-now-or-wait decision. This article covers what has happened since, what still has to happen, and what business owners can do in the meantime.

CredibleLaw is a national legal resource and attorney referral network, not a law firm. This article is general information, not legal advice.

What Changed on September 28

When the House voted in mid-September, one procedural question remained. The Senate had already passed its own version, S. 3977, on August 3, 2026. The two bills carried the same substance but different short titles, so one chamber needed to pass the other’s bill before anything could go to the President.

The Senate resolved that by taking up the House bill itself. The Senate’s daily floor record for September 28 lists H.R. 7730 as passed by unanimous consent, with no amendment noted. A bill passed in identical form by both chambers does not need a conference committee or another House vote.

The text the House passed, available on GovInfo, makes three changes that matter most to MCA-burdened businesses and their owners:

• Subchapter V: eligibility for debtors whose aggregate noncontingent, liquidated secured and unsecured debts are not more than $7,500,000, excluding debts owed to affiliates or insiders.
• Chapter 13: a single limit of less than $2,750,000 in noncontingent, liquidated debts, replacing the separate secured and unsecured caps.
• Application: the amendments apply to any case commenced on or after the date of enactment.

From Passage to Law: The Steps That Remain

Passing both chambers is not the same as becoming law. Several steps follow, and each takes some time:

1. Enrollment. The originating chamber, here the House, prepares the final enrolled version of the bill.
2. Signatures of the presiding officers. The Speaker of the House and the Senate’s presiding officer sign the enrolled bill.
3. Presentment. The bill is formally delivered to the White House. Bills are often presented days or even weeks after final passage, so news reports describing a bill as “sent to the President” may run ahead of formal presentment.
4. The President’s action. Under Article I, Section 7 of the Constitution, the President has ten days, Sundays excepted, after presentment to sign or veto. A bill that is neither signed nor returned within that period becomes law without a signature, unless Congress has adjourned in a way that prevents its return.

There has been no public indication of opposition, and the bill passed both chambers without recorded objection. Still, the effective date depends entirely on when enactment happens, and that date is not yet known.

How We Got Here: The Subchapter V Limit Since 2020

This is the third time Congress has set the limit at $7.5 million. The first two increases were temporary, which is why many owners and even some advisors are unsure what the current number is.

The 2022 episode is a useful reminder that timing can slip. The earlier increase lapsed in March 2022, and the restoring law was not signed until June 21, 2022. Businesses that needed the higher limit during that gap either qualified under the lower number, filed under traditional Chapter 11, or waited.

One point of confusion worth clearing up: some coverage describes the new limit as adjusting for inflation every three years. H.R. 7730 itself does not contain a separate adjustment clause. Any future adjustments would come from the Bankruptcy Code’s existing three-year inflation mechanism in 11 U.S.C. § 104, which already covers the Subchapter V amount.

Who Newly Qualifies: Three Examples

Eligibility turns on the business’s noncontingent, liquidated debts on the day the case is filed, excluding debts owed to affiliates or insiders, and at least half of the counted debt must arise from business activities. The examples below are hypothetical and simplified, but they show how the numbers tend to work for companies carrying MCA debt.

Example 1: A restaurant group that crosses into eligibility

This business cannot use Subchapter V today. If H.R. 7730 is enacted, it could, for a case filed on or after the enactment date.

Example 2: A trucking company that may already qualify

On paper this company owes $3,625,000, and its owner may assume it is too large for Subchapter V. Once the affiliate debt is excluded, it may already be eligible. Waiting for the new law would not be necessary.

Example 3: A manufacturer the bill does not reach

A manufacturer with a $4,900,000 bank term loan, a $1,500,000 credit line, $1,350,000 in MCA balances, and $600,000 in trade payables has $8,350,000 in counted debt. That exceeds even the new limit. Its options remain traditional Chapter 11 or an out-of-court restructuring, which often means negotiating with each MCA funder individually.

Calculating eligibility in a real case is more involved than these examples. Disputed balances, guaranties, and how a court treats a particular MCA balance can all affect the total. CredibleLaw’s guide to MCA bankruptcy options explains the broader choices.

The 90-Day Lookback: Why the Weeks Before Enactment Matter

A business that may file once the new limit takes effect should understand how bankruptcy treats payments made shortly before a filing. Under 11 U.S.C. § 547, certain transfers made to a creditor within 90 days before the petition, or within one year for insiders, can be recovered as preferences. Generally, the transfer must have been made on account of an existing debt while the business was insolvent, and it must have given the creditor more than it would receive in a Chapter 7 liquidation. For business debts, transfers totaling less than $8,575 to a single creditor are generally exempt from recovery.

For MCA-burdened businesses, this can matter in a few ways:

• Collection that speeds up before a filing. Funders aware of a coming change may push harder now, through lawsuits, bank levies, or larger debits. Liens and payments obtained during the 90-day window can sometimes be challenged later.
• Who brings the claim. In Subchapter V, the business typically remains in control as debtor in possession and generally holds a trustee’s avoidance powers under 11 U.S.C. § 1184, subject to the court’s oversight.
• The funder’s defenses. Funders often argue that daily remittances are deliveries of purchased receivables rather than payments on a debt. How a court characterizes the MCA can decide whether a preference claim exists at all.

This is one reason records matter now. A dated log of every MCA debit, levy, and settlement payment in the months before any filing gives an attorney what is needed to evaluate potential recoveries.

How MCA Funders May Respond

A permanent $7.5 million limit changes the risk picture for MCA funders, whose collections depend on future revenue that a bankruptcy filing can interrupt. Responses are likely to vary by funder, and none of them is certain. Some may tighten underwriting or accelerate collection on accounts they view as likely to file. Others may become more open to settlements, payment restructurings, or agreements that let a merchant refinance.

That last point is worth emphasizing. For a funder weighing a refinancing request, a business that can reorganize under Subchapter V is a business with more leverage. Agreeing to move behind a new lender through an MCA subordination agreement may look better to a funder than facing a stay and a restructuring plan. CredibleLaw’s guide on MCA settlement covers negotiated resolutions that avoid court altogether.

Owners Who Personally Guaranteed MCAs

Most MCA agreements include a personal guaranty from the owner. A Subchapter V filing protects the business, but it does not automatically protect a guarantor. The Chapter 13 change in H.R. 7730 may matter here. Replacing the separate secured and unsecured caps with a single limit of less than $2,750,000 could make Chapter 13 available to more owners with regular income who face significant personal liability. Whether guaranty debt counts as noncontingent and liquidated depends on the facts, including whether the funder has made demand. Owners should get individual advice before assuming either chapter fits.

What Is Still Unclear

• The enactment date. The new limits will apply to cases commenced on or after that date, which is not yet set.
• Cases already filed. A business already in traditional Chapter 11 does not automatically gain Subchapter V eligibility. Attempts to dismiss and refile in order to use the higher limit may face good-faith scrutiny, and outcomes are likely to depend on the court and the facts.
• Same-day filings. Because the amendments apply to cases commenced “on or after” enactment, a petition filed on the day of enactment should qualify. Counsel will want to confirm the enactment date before filing.
• Court guidance. Bankruptcy courts typically post notices when eligibility thresholds change. Local rules and forms may lag behind enactment by a short period.

A Planning Checklist for the Signing Window

1. Build a debt schedule as of today. List every creditor, balance, and whether the debt is fixed, disputed, or contingent.
2. Flag insider and affiliate debts. They are excluded from the eligibility count and can change the answer.
3. Log every MCA debit and enforcement action. Record dates, amounts, and the funder involved, going back at least 90 days.
4. Gather the contracts. Collect each MCA agreement, addendum, renewal, guaranty, and any reconciliation requests and responses.
5. Avoid new MCA debt. New advances add to the count, can trigger stacking disputes, and can complicate future SBA refinancing.
6. Route funder communications through counsel. Statements made now can surface later in litigation or a bankruptcy case.
7. Compare every path. Settlement, subordination to allow a refinance, traditional Chapter 11, and Subchapter V after enactment each carry different costs and timelines.

Frequently Asked Questions

Has the President signed H.R. 7730?

As of the morning of October 5, 2026, no signing had been reported. The Senate passed the bill on September 28, 2026, after House passage on September 16. Until enactment, the Subchapter V limit remains $3,424,000.

How long does the President have to act on the bill?

Under Article I, Section 7 of the Constitution, the President has ten days, Sundays excepted, after the bill is formally presented. The clock starts at presentment, which can occur days or weeks after final passage. A bill neither signed nor vetoed in that period becomes law, unless a congressional adjournment prevents its return.

What happens if the bill is not signed?

If vetoed, Congress could attempt an override by a two-thirds vote in each chamber. If neither signed nor returned within ten days while Congress is in session, it becomes law without a signature. There has been no public indication of a veto.

If my business already filed Chapter 11, can it use the new limit?

Not automatically. The amendments apply to cases commenced on or after the date of enactment. Dismissing a pending case and refiling to use the higher limit raises good-faith questions that a bankruptcy attorney should evaluate.

Will the $7.5 million limit adjust for inflation?

The bill does not include its own adjustment clause. Future adjustments would come through the Bankruptcy Code’s existing three-year inflation mechanism in 11 U.S.C. § 104.

Can money an MCA funder collects now be recovered if my business files later?

Possibly. Under 11 U.S.C. § 547, certain transfers made within 90 days before a filing can be recovered as preferences if the legal requirements are met. Funders often argue MCA remittances are not payments on a debt, so outcomes depend on how the agreement is characterized and on the facts.

Does H.R. 7730 help owners who personally guaranteed MCAs?

Indirectly, it may. Subchapter V protects the business, not the guarantor. The new combined Chapter 13 limit of less than $2,750,000 could open Chapter 13 to more individual owners with regular income, depending on how their guaranty obligations are classified.

Is bankruptcy the only option for a business between $3.4 million and $7.5 million in debt?

No. Many businesses resolve MCA debt through negotiated settlements, restructured payments, or refinancing with a subordination agreement. The new limit mainly changes the leverage each side brings to those negotiations.

More coverage: Merchant cash advance news · Business bankruptcy · MCA bankruptcy options Sources: U.S. Senate Daily Press, floor wrap-up for September 28, 2026; H.R. 7730 as passed by the House (GovInfo); U.S. Constitution, Article I, Section 7; 11 U.S.C. §§ 104, 547, and 1184 (Cornell Legal Information Institute); Federal Register, Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases (February 4, 2025); Bloomberg Law, “Higher Debt Caps to Boost Small Business, Personal Bankruptcies” (September 30, 2026).

CredibleLaw is a legal resource and attorney referral network, not a law firm, and does not provide legal advice. Use of this site does not create an attorney-client relationship. Attorneys in our network are independent. The examples in this article are hypothetical. Pending legislation may change, and its effective date depends on enactment. Information reflects sources reviewed as of October 5, 2026.