Recent COVID-19 Impact on Bankruptcy Matters

On March 27, 2020, the President signed the CARES ACT which contained changes to the Bankruptcy Code. This CARES ACT will impact small businesses and consumers who have already filed bankruptcy or that may be faced with needing to file, seeking bankruptcy relief in light of the current economic state. The CARES Act contains a provision that amends the definition of “income” within the Bankruptcy Code for Chapter 13 and 7 filings, so that coronavirus-related payments received from the federal government will not be treated as income, allowing consumers and debtors to retain their stimulus payments. 

Additionally, payments received under the CARES Act will be excluded from the calculation of disposable income for purposes of confirming a Chapter 13 Plan. Debtors who are currently in an active Chapter 13 case and are currently making payments under their Chapter 13 plan may requesting a plan modification under the CARES Act Bankruptcy Code amendments if they are experiencing financial hardship due to the coronavirus. Debtors may also seek a plan extension for up to seven years after the initial plan payment was due, opposed to when debtors were only permitted to go up to five years to make their required plan payments.

Federally backed student loans have also been extended for six months, through the end of September 2020, under the CARES Act, without any penalties being implemented on the borrower.

If you wish to discuss this topic or learn more, please feel free to contact the Law Office of Ray Garcia, P.A., at 305-227-4030 or via email at for a free consultation.

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Law Office of Ray Garcia, P.A.

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