On March 26, 2020 the Coronavirus Aid, Relief And Economic Security Act (CARES Act) was signed into law. This act contains many provisions to ease the financial burden Americans are facing. These provisions include both direct financial relief and policy changes.
Most people know about provisions like the stimulus checks allocated for many Americans, and the funds going to businesses large and small. But for Americans who were already stretched thin financially, and who declared bankruptcy prior to the enactment of the CARES Act or are considering filing now, it is important to know that there are special provisions for you particularly.
CARES Act changes to the bankruptcy code
There are two important changes everyone who either has declared bankruptcy, or is considering declaring bankruptcy, should know.
1. Income from the government in the form of stimulus payments will be excluded from an individual’s income for the purpose of determining eligibility for chapter 7 or 13 bankruptcy, or chapter 13 reorganization. This is important, as it can preserve your ability to declare bankruptcy and change the amount you are responsible for payments.
2. Individuals who have already declared chapter 13 bankruptcy, and whose income has been affected by the pandemic, can modify their repayment plan including extending their payments for up to seven years after the initial payment was due. This can allow you to stretch your payments over a longer period of time, easing the financial burden on you and your family.
These changes affect all bankruptcy cases both pending and active. They are applicable for a year following the signing of the Act.
Wondering how this affects you?
The CARES Act is confusing, and especially so with the huge influx of news overwhelming the media. If you are considering bankruptcy or have filed, and are wondering how this affects you, please contact our office. We have extensive experience in this field and are able to answer your questions. You can reach us through our online contact form or by calling 800-261-3275.