Getty Images Treasury Secretary Janet Yellen had warned that the US could fall into a recession if Congress failed to address the debt ceiling within a fortnight.
Disagreements over the ceiling - the limit on how much the government can borrow - are not new in US politics.
The announcement came after what Schumer's Republican counterpart Mitch McConnell said were negotiations "in good faith" that had continued through the night.
The House Majority leader, Steny Hoyer, said that vote in the House of Representatives will be held on Tuesday.
If the US defaulted on debts analysts say it would severely hurt the country's credit rating, plunge the global financial system into turmoil, and possibly lead to a self-inflicted recession.
Borrowing is done via the US Treasury, through the issuing of bonds.
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