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How Will the CARES Act Affect Your Bankruptcy Case?

Attorney and client

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, went into effect on March 27, 2020. It allocated $2 trillion in relief for individuals, families, and businesses hurt by the coronavirus (COVID-19) pandemic.

Some provisions help individuals who have filed (or plan to file) bankruptcy. The two main adjustments are as follows:

  1. Financial aid received pursuant to the CARES Act (e.g. stimulus payments, enhanced unemployment, etc.) will not affect bankruptcy calculations. More specifically, the relief will not be considered income through the means test and will not affect eligibility to file Chapter 7. Similarly, these funds cannot be considered in disposable income calculations for the Chapter 13 repayment plan.
  2. Chapter 13 debtors can extend the length of their Chapter 13 plan if they miss plan payments AND the failure to pay was attributable to COVID-19. Normally, plans can only be 3-5 years, but this provision allows filers to extend their plans to 7 years total. This right does not apply to debtors whose Chapter 13 plans were NOT confirmed on or before March 27, 2020. Also, the right to extend Chapter 13 plans is temporary and ends on March 27, 2021.

Bring Your Questions & Concerns to Our Firm

Sapinski Law Office, S.C. remains committed to its current clients during this difficult time and has filed many CARES Act Chapter 13 plan extensions. If you would like to know how the CARES Act affects your bankruptcy case, please do not hesitate to get in touch with us.

Call (888) 298-1041 or contact us online today. We look forward to helping you overcome your financial crisis.