Debt and bankruptcy are unfortunate realities during the time of the coronavirus. It is important to know your legal options.
In the response to the coronavirus pandemic, the United States government has passed a sweeping new law to help relieve the financial burden on individuals and small businesses. Among other things, this new law changed the bankruptcy code to assist people in need with financial recovery from this crisis.
For cases filed under Chapters 7 and 13 of the Bankruptcy Code, the CARES Act modifies the definition of “current monthly income” and “disposable income” under Chapter 13 plans to specifically exclude payments made under federal law relating to the national emergency, such as stimulus checks. That means the stimulus payment you will receive from the federal government due to the emergency will not raise your income and potentially disqualify you from relief from your debts, and those funds cannot be taken away from you in the bankruptcy process.
The CARES Act also allows Chapter 13 filers with plans that were confirmed before March 27, 2020, to seek modifications to their plan due to coronavirus-related hardships. A plan also may be modified to extend the plan period up to seven years after the first payment under the original confirmed plan. The CARES Act also addresses bankruptcy for small businesses, Section 1113 of the CARES Act increases the debt limit to $7.5 million for Chapter 11(5) reorganization bankruptcies for small businesses.
If you have questions in this uncertain time about debt and options for getting a fresh start using bankruptcy as a tool, please reach out to Limitless Law at 360-685-0145. We are offering free 15-minute phone consultations to help answer any questions you may have about your legal rights and options.