S. 3977 explained  ·  119th Congress  ·  Pending in Congress

Bankruptcy Threshold Adjustment Act of 2026

Create a free account or sign in to follow S. 3977 and get alerts. Policy area: Finance and Financial Sector Create a free account or sign in to follow the Finance and Financial Sector policy area and get alerts. ▲ 70 days since action Sponsor: Chuck Grassley, IA-Senate, R → Congress.gov

Cosponsors: 5 (3 D, 2 R) · per Congress.gov, 2026-10-14

Introduced: 2026-03-03

Latest action (2026-08-10): Held at the desk.

What S. 3977 does, in plain terms

Bankruptcy Threshold Adjustment Act of 2026 This bill restores changes that expired in 2024 applicable to debt limits for Subchapter V (small business reorganization) and Chapter 13 (the wage earner's plan) bankruptcies. Specifically, the bill increases the debt limit under Subchapter V from approximately $3.4 million to $7.5 million and increases the cumulative debt limit under Chapter 13 from approximately $2.1 million to $2.75 million. The bill also applies both secured and unsecured debt towards the Chapter 13 limit. (Currently, separate limits apply to secured and unsecured debt under Chapter 13 bankruptcy.)

Official summary by the Congressional Research Service, via Congress.gov.

Constitution Index

“VFA Constitution grade”

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S. 3977 has not been graded yet. New measures with an official summary are graded daily under the published rubric.

The Framers

“Founders’ Verdict”

CONDITIONAL

Confidence 0.50

Archived SI output (machine-generated)

No editorial review recorded. This historical SI verdict was machine-generated by software and predates the review desk; check it against the official bill text.

Synthesis

The bill adjusting bankruptcy thresholds is constitutional provided that the adjustment is reasonable, does not impair the obligation of contracts, maintains uniformity, and does not delegate legislative power without clear standards. This conditional approval reflects the views of Madison and Marshall, who emphasize the need for the adjustment to be a necessary and proper means to execute the bankruptcy power and to respect separation of powers and due process.

Hamilton YES

The Constitution vests in Congress the power to establish uniform laws on the subject of bankruptcies throughout the United States. Adjusting the monetary thresholds for bankruptcy filings is a proper exercise of this enumerated power, as it merely refines the uniform system Congress is authorized to create. Such adjustments do not infringe upon any other constitutional provision or the rights of the states, as the bankruptcy power is exclusive to the federal government when exercised uniformly. The proposed legislation is therefore a constitutional exercise of legislative authority.

Article I, Section 8, Clause 4 Federalist No. 32
Jefferson YES

The Constitution grants Congress the power to establish uniform laws on the subject of bankruptcies throughout the United States. Adjusting the monetary thresholds for bankruptcy eligibility is a necessary and proper exercise of that enumerated power, for it concerns the administration of a uniform federal bankruptcy system. I find no encroachment upon the rights reserved to the states, as bankruptcy is expressly committed to the federal authority. The law merely calibrates the provisions of an already-existing federal power, without disturbing state sovereignty in matters not delegated.

Article I, Section 8, Clause 4 Amendment X
Madison CONDITIONAL

The Constitution vests in Congress the power to establish uniform laws on the subject of bankruptcies throughout the United States (Article I, Section 8, Clause 4). This power is plenary and admits of adjustment to economic conditions, provided the law remains uniform and does not violate other constitutional restraints. The proposed adjustment of bankruptcy thresholds, if it merely updates dollar amounts to account for inflation or changed economic circumstances, falls within the bankruptcy power. However, if the adjustment is so extreme as to effectively deny access to bankruptcy relief for …

Article I, Section 8, Clause 4 Article I, Section 10, Clause 1 Federalist No. 42
Marshall CONDITIONAL

This bill, which adjusts bankruptcy thresholds, is a proper exercise of Congress's power under Article I, Section 8, Clause 4 to establish uniform laws on the subject of bankruptcies throughout the United States. However, its constitutionality depends on whether the adjustment is a necessary and proper means to execute that power, as established in McCulloch v. Maryland (1819). If the adjustment is rationally related to the legitimate end of maintaining a uniform and effective bankruptcy system, it is constitutional. But if it arbitrarily alters thresholds in a manner that undermines uniformit…

Article I, Section 8, Clause 4 McCulloch v. Maryland (1819) Marbury v. Madison (1803)
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