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Bankruptcy Relief Included In CARES ACT Emergency Legislation


As a result of the Covid-19 Pandemic, Congress has emergently passed, and the President has signed legislation to provide for an economic stimulus and assist struggling Americans from the economic effects of this crisis. The CARES ACT (Coronavirus Aid, Relief and Economic Security Act)includes several provisions impacting existing and potential bankruptcy cases. They include:

  • Payments received under the act are not deemed to be income under
    the Bankruptcy Code and will have no impact on the means test calculation
    for Chapter 7 or the Disposable Income test for Chapter 13
  • Modifications for current Chapter 13 plans may be permitted if the debtor is experiencing a “material financial hardship due to the coronavirus pandemic”- including the extension of payments for an additional two years beyond the current 60-month maximum.
  • Temporary increases in the debt limits for Subchapter V of Chapter 11 cases for small businesses and individuals.

We anticipate that this current financial upheaval will have a significant impact on both existing and potential bankruptcy debtors. If you are in a Chapter 13 plan and can no longer afford the payments, or if you are considering bankruptcy as a viable option to blunt the economic impact of the crisis, please call our office for assistance. We are fully operational, albeit remotely.