The United States House of Representatives has passed a bill to expand a provision of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that establishes simplified bankruptcy procedures for small businesses.
The 2019 Small Business Reorganization Act has already passed the Senate, so it is now moving to President Joe Biden’s desk to be signed into law.
The CARES Act temporarily allowed more small businesses to qualify for these simplified procedures by increasing the upper debt limit from $2.7 million to $7.5 million. However, this increase expired on March 27, 2022.
This bill would provide a two-year extension of the CARES Act increase to $7.5 million. In addition, it would increase the debt limit for individuals to qualify for Chapter 13 bankruptcy for two years, allowing more people to try to save their homes from foreclosure. This is especially important now with rising house prices and skyrocketing student loan debt, which could push more people above the debt limit to qualify for Chapter 13 bankruptcy.
“This is a victory for small businesses and working families trying to regain their financial footing after a difficult few years,” said U.S. Sen. Sheldon Whitehouse (D-RI). “We must do all we can to help Americans recover from the pandemic and the economic turmoil it has unleashed. That is why I am happy that our bipartisan bill will soon be the law of the land.
Whitehouse was one of many senators to congratulate the House for passing this Senate bill. Whitehouse was the lead sponsor of the bill along with U.S. Senator Chuck Grassley (R-IA).
“Small businesses going through tough times shouldn’t have to deal with a mountain of paperwork designed for big businesses to reorganize and keep running. Senator Whitehouse and I passed the Small Business Reorganization Act in 2019 to streamline and remove barriers to the bankruptcy process for small businesses. ? In a largely bipartisan way, Congress has acted to build on the success of this policy to help more small businesses stay afloat — especially in the face of tough economic headwinds,” Grassley said.
The senses. Americans Dick Durbin (D-IL) and John Cornyn (R-TX), who co-sponsored the bill, also applauded the passage of the legislation.
“American families and small businesses facing economic hardship need the help of Congress,” Durbin said. “Our bipartisan legislation will give small businesses and families more flexibility to navigate the bankruptcy system and get back on their feet.”