In response to the financial impact of the Coronavirus, Congress passed the CARES Act which provides individuals and businesses various forms of relief, such as stimulus checks and increased unemployment. The CARES Act also includes provisions that specifically impact current bankruptcy law. For example, while all income is generally taken into account when a personal bankruptcy is filed to determine if the debtor has any ability to pay something to creditors, the CARES Act specifically excludes from income any money received in the form of a stimulus check. In addition, if an individual is already in a chapter 13 bankruptcy, their income being impacted by Covid 19 would be a basis to modify the existing bankruptcy plan. Further, if they are in a chapter 13 and have a confirmed plan, and Covid 19 impacts their income, the debtor can seek to extend their plan repayment term from a previous maximum term of 5 years to a new maximum term of 7 years which will allow the debtor to lower their monthly payment.
There are provisions included in the CARES Act which also alter the Small Business Reorganization Act of 2019. Specifically, the CARES Act increases the debt limit from $2,725,625.00 to $7,500,000.00 which will allow more struggling businesses to file under the more streamlined version of Chapter 11. The increase in debt limit is purportedly in effect for one year only, however, considering many thought the original debt limit was too low, it is possible that the increase can ultimately be made permanent.
If you have any questions about whether bankruptcy can help you, you should consult an experienced attorney.
