In March of 2020, the impact of the COVID-19 pandemic forced stay-at-home orders in most states, temporary closures of many businesses, and financial turmoil for many U.S. citizens. Unemployment rates soared over 4% nationally in March, and many more will continue to need government unemployment support until they can return to work.
If you’re one of the 22 million+ individuals who filed for unemployment due to the effects of the novel coronavirus crisis, you may still be struggling to meet debt payments even if your unemployment application was accepted. Fortunately, the 2020 CARES Act (Coronavirus Aid, Relief, and Economic Security Act) offers many forms of support, including several impacts on bankruptcy as a form of debt relief. If you’re filing for bankruptcy in Worthington, MN, Behm Law Group, Ltd. can provide guidance and protection during this difficult time.
When it comes to direct impacts on the bankruptcy code, the CARES Act has several effects that are currently in place:
• Monthly Income: In order to determine eligibility and the various economic circumstances of a bankruptcy filer, the court needs information about a filer’s current monthly income. However, many filers have an altered income during this time of national crisis due to the support of the CARES $2.2 trillion stimulus package. Most citizens will receive a stimulus check up to $1,200 in addition to other state and federal payouts. These government financial aid payments are NOT included in your monthly income and will not prevent you from qualifying for bankruptcy based on that income.
• Disposable Income: In addition to eliminating government payments related to COVID-19 and the CARES package, these amounts will not be included as disposable income in your bankruptcy case. This means those filing for, or currently in, a Chapter 13 repayment plan will not have to dedicate stimulus checks or other CARES payments to repaying creditors.
• Chapter 13 Modifications: For those who are already working through Chapter 13 repayment plans, there are some options for plan modifications based on changes to their financial circumstances caused by the COVID-19 pandemic. For both direct and indirect impacts of the COVID-19 crisis, Chapter 13 filers can request plan extensions up to seven years as well as other various plan modifications.
• Creditor Claims: In a typical bankruptcy case, creditors will file a claim on the debt owed to them and on any property involved regarding that loan. While the CARES Act doesn’t modify creditor claims in a new petition or a current bankruptcy case, it does allow filers to request payment deferments and cure defaults on liens. These conflicts will likely be resolved on a case-by-case basis during this time.
If you’re considering filing for bankruptcy in Worthington, MN and want to know more about how the CARES Act may affect that process, contact Behm Law Group, Ltd. today at (507) 387-7200 or email@example.com.