The Bankruptcy Threshold Adjustment Act of 2026, reported out of committee and awaiting floor action, doubles the debt limits for consumer Chapter 13 and small business Chapter 11 filings. This directly expands credit loss severities for U.S. consumer lenders. Capital One ($COF), Synchrony ($SYF), and Ally Financial ($ALLY) face earnings headwinds of 8–30% from higher charge-off rates. Citigroup ($C) faces moderate incremental losses. The 30-day uptrend in lender stocks risks reversal as the bill's passage probability increases.
→ Auto loan borrowers with higher total indebtedness (auto loan + credit card + personal loans) will now qualify for Chapter 13, allowing them to reduce secured auto loan principal through cram-down provisions. Dealer floor plan lenders face increased small business Chapter 11 filings that can stretch repayment terms.