In the past few years, a lot has changed for bankruptcy law. Even before the coronavirus pandemic rocked the world, Congress had put some significant changes in bankruptcy law into effect. In response to COVID-19, more changes had to be quickly put into place. Since the worst of the pandemic is hopefully behind us, there may be even more interesting additions and adjustments to how the bankruptcy code in New Ulm, MN and the rest of the country is handled. For those considering filing a petition now, Behm Law Group, Ltd. attorneys can guide and protect you from start to finish in a Chapter 7, 13, or 12 case. We work primarily with individuals filing for liquidation or reorganization bankruptcy, but we’ve also helped small businesses file for liquidation and reorganization bankruptcy in the local region. There are many benefits to hiring a bankruptcy lawyer to work on your case, including the prevention of dismissals, potential audits, appeals, delays, statutes of limitations, creditor violations, judgments, navigating the ever-changing bankruptcy laws, and much more.
Since 2019, there have been some significant adjustments to the bankruptcy code. Some were put into place to improve our system, while others were in direct response to the COVID-19 pandemic and the subsequent lockdowns. The two most significant changes that have been enacted include:
- SBRA in 2019: The Small Business Reorganization Act was signed into law in February of 2019. This law lowered the debt amount required to file Chapter 11 business reorganization bankruptcy. Unless a small business is owned as a sole proprietorship or partnership, Chapter 11 is the only option for bankruptcy reorganization. By lowering the debt requirements, many smaller businesses could reorganize instead of having to possibly shut down by having to file a Chapter 7 liquidation bankruptcy. This law created a subchapter of Chapter 11 allowing businesses with under $2,725,625 in debt to file a faster and easier reorganization case.
- CARES in 2020: In response to the economic shutdown of coronavirus, the Coronavirus Aid, Relief, and Economic Security Act was enacted in March of 2020. With regard to the bankruptcy code, the CARES Act expanded the faster and easier subchapter of the SBRA Chapter 11 bankruptcy debt limit to $7,500,000 for one year (this expired in March of 2021). It also allowed some Chapter 13 repayment plans to extend up to 7 years (rather than the usual 3-5 years). All stimulus income from the other provisions of the CARES Act is exempt from bankruptcy liquidation.
In addition to the changes made when these laws were put into place, there are potential adjustments in the code that have been introduced and others that might be on the horizon. For example, the Student Borrower Bankruptcy Relief Act (SBBRA) might allow student loans to be discharged more easily in bankruptcy. Changes to Chapter 12 bankruptcy might be coming too.