The CARES Act is a $2.2 trillion economic stimulus bill that has been put into place by the current administration as a way to help those affected by COVID-19. It provides fast and direct assistance for American workers, families, and small businesses to help them stay on their feet during these hard times. Even still, there are still many that fall short on their payments and turn to bankruptcy for the help they need.
The CARES Act and Bankruptcy
The CARES Act is designed to provide direct financial help to individuals, families, and businesses, but what happens when those parties file for bankruptcy?
There are a number of temporary modifications to the Bankruptcy Code to help debtors under Chapters 7 and 13 specifically, including:
- Depending on the type of bankruptcy, those people are obligated to either liquidate their assets or make payments to rid themselves of debt. However, the money that is provided by the CARES Act is not treated as “income” during the bankruptcy process, making it exempt from being given to creditors.
- The CARES Act also specifies that the calculation of disposable income paid to creditors under a Chapter 13 bankruptcy plan will not include any coronavirus-related payments.
- It also allows individuals and families filing under Chapter 13 to seek payment modifications if they are experiencing material hardship due to the pandemic, including extending their payments for up to 7 years after their initial plan payment was due.
All of these provisions are able to be taken advantage of today but will expire with the bill on its current end date of December 31, 2020.
Contact Our California Bankruptcy Team Today
With a unique set of circumstances, and new benefits available, the process of filing for bankruptcy may seem daunting and difficult. We are here to make the experience as easy and painless as possible through personalized and compassionate services that you can access today.
If you have any questions regarding the CARES Act and your bankruptcy case, do not hesitate to contact us today through our website or give us a call at (310) 846-8454!