Source: United States Senator for Rhode Island Sheldon Whitehouse
06.21.22
New law helps small businesses stay open and individuals keep their homes as they find their financial footing through bankruptcy
Senators Sheldon Whitehouse (D-RI), Dick Durbin (D-IL), Chuck Grassley (R-IA), and John Cornyn (R-TX) welcomed President Joe Biden’s signing of their bipartisan legislation to help small businesses and individuals stay afloat during bankruptcy. The senators guided the bill through the Senate with unanimous support.
“The bankruptcy process should help small businesses and working families to weather financial hardship and emerge stronger. This new law will help them do that,” said Whitehouse. “I’m gratified to see President Biden sign this bipartisan effort. I was pleased to work with Senators Grassley, Durbin, and Cornyn to improve our bankruptcy process.”
“As American families and small businesses face mounting economic uncertainty amid historic inflation and spiking interest rates, it’s more important than ever that we remove hurdles to reorganizing when folks fall on hard times. Our bipartisan bill – now law – builds on my Small Business Reorganization Act in 2019 with Sen. Whitehouse to streamline the bankruptcy process for small businesses by eliminating onerous paperwork requirements designed for major corporations,” said Grassley.
“Too many mom-and-pop shops are getting caught up in a complicated bankruptcy system while working to get back on their feet,” said Durbin. “At the same time, many families are struggling with overwhelming levels of debt. This bipartisan bill brings relief to both. I’m grateful to my Senate colleagues for their partnership on this critical legislation, and applaud President Biden for acting swiftly to sign this into law—a testament to this Congress’s, and this Administration’s, commitment to supporting American businesses and families.”
“For small businesses and families who fought their way through the pandemic and are now facing economic hardship, our complicated bankruptcy process can be another barrier to survival,” said Cornyn. “I’m glad we could come together on this reprieve from burdensome requirements, especially given record-high inflation and rising interest rates.”
Whitehouse and Grassley passed the Small Business Reorganization Act in 2019 to establish streamlined bankruptcy procedures that help small business owners keep their companies afloat and preserve jobs. The CARES Act of 2020 temporarily allowed more small businesses to qualify for those streamlined procedures by increasing the upper debt limit for small businesses from $2.7 million to $7.5 million. That increase expired on March 27, 2022.
The legislation provides a two-year extension to the CARES Act increase to $7.5 million, and makes minor technical fixes to the Small Business Reorganization Act. It also increases the debt limit for individuals to qualify for Chapter 13 bankruptcy for two years, allowing more individuals the opportunity to try to save their homes from foreclosure. This increase addresses the concern that rising home prices and exploding student loan debt will push increasing numbers of individuals over the debt limit to qualify for Chapter 13 bankruptcy.