In August 2026, 302 small businesses elected Subchapter V, a 63% increase over August of last year. That follows a first half in which Subchapter V elections rose 50% and commercial Chapter 11 filings rose 28%. Total filings of every kind reached 310,550 through June, up 12% year over year.
Three forces are doing most of the work.
Tariffs land on the businesses least able to absorb them
A large company negotiates with suppliers, shifts sourcing and pushes cost into price. A small business with one supplier and a contract signed last year does none of that. Edward Altman of NYU, who built the standard credit-distress model, has described tariffs as hitting small and medium firms specifically because they operate on margins too thin to absorb a duty and too small to pass one through.
The credit that kept marginal businesses alive is gone
Companies that could service debt at low rates cannot service the same debt at current rates. That is not a management failure. It is a refinancing event that never came. Renewals are tighter, personal guarantees are being enforced, and lines that were routinely extended are being reviewed.
Input and freight costs keep moving
Diesel hit an all-time high of $5.85 a gallon on September 4. Freight, packaging and delivered goods costs follow diesel with a short lag. For a business that ships or receives anything, that is another cost increase arriving in the same quarter as everything else.
Lender tightening terms or a creditor threatening suit? Call before the judgment, not after.
Call (610) 255-7500The practical point
The businesses that come out of this intact are the ones that restructure while they still have a viable operation to restructure. Subchapter V is built for that moment. It lets the owner keep the company, commits three to five years of disposable income, and does not require creditors to agree. The current debt ceiling is $3,424,000, and pending legislation would set it at $7,500,000 permanently.
Is Subchapter V a fit for your business?
Three questions. Nothing is sent anywhere until you choose to contact us.
Subchapter V is very likely available to you. You keep ownership, you stay in control of operations, and creditors cannot block a fair plan. Filing stops lawsuits, levies and confessed-judgment enforcement immediately.
Subchapter V may not be the right tool, but traditional Chapter 11, a structured Chapter 7 wind-down, or an out-of-court workout may be. We will tell you which in the first call.
Waiting costs options. A judgment, a frozen account or a confessed judgment entered against the business narrows what a plan can accomplish. If the last two renewals were harder than the ones before, that is the signal. Do not wait for the sheriff.
We handle Subchapter V, Chapter 11 and business Chapter 7 in Pennsylvania, New Jersey, New York and Maryland. See our Subchapter V page and, for trucking companies, our owner-operator page.
Frequently asked questions
What is the Subchapter V debt limit in 2026?
$3,424,000 in aggregate noncontingent liquidated debt. At least half must come from business activity. A bill is pending in Congress to raise the limit permanently to $7,500,000.
Can I keep ownership of my business in Subchapter V?
Yes. Subchapter V removes the absolute priority rule, so the owner keeps the equity as long as the plan commits projected disposable income for three to five years.
Do creditors have to agree to a Subchapter V plan?
No. The court can confirm the plan over creditor objections if it is fair and equitable and commits all projected disposable income.
Will filing stop a lawsuit or bank levy against my business?
Yes. The automatic stay stops lawsuits, levies, garnishments and most collection activity the moment the case is filed.
Sources: Epiq AACER and American Bankruptcy Institute monthly filing statistics (July and September 2026); Inc. (Altman interview); Axios (Sept. 4, 2026). Figures current as of September 2026.
