The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted on March 27, 2020, provides for a much-needed economic relief to many, and also temporarily modifies certain consumer provisions of the Bankruptcy Code during the pendency of only one (1) year after its enactment.
The following are the key modifications to the Bankruptcy Code that you should be aware of:
Modified provisions for Chapter 7 and Chapter 13 debtors:
- The stimulus payments from the CARES Act are specifically excluded from being considered ‘current monthly income’ and ‘disposable income’ for bankruptcy purposes.
- A Chapter 13 debtor with a confirmed plan before March 27, 2020, and directly or indirectly affected by the pandemic, may file a modified plan under section 1329 to extend the Chapter 13 payments for up to seven (7) years, instead of five (5) years.
Modified provisions for Chapter 11 small business debtors:
- The debt limit to be eligible to be considered a small business debtor under Subchapter V was increased to $7.5 million in aggregate debt.
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