How Has the Coronavirus Pandemic Affected Bankruptcy Cases?

 Posted on May 15, 2020 in Bankruptcy Law

Nobody wants to file for bankruptcy. Even though you can discharge your debts so that you are no longer legally liable for them, there are a few negative consequences that come from filing for bankruptcy, including a hit to your credit score. However, if you are one of the millions of Americans who are struggling financially, bankruptcy may be the solution. The current coronavirus pandemic has hit the U.S. economy hard, causing unemployment to soar to levels unseen since the Great Depression. The coronavirus has affected many things, including making temporary changes to the bankruptcy code.

The CARES Act

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the economic crisis emerging from the pandemic. Valued at more than $2 trillion, the CARES Act was monumental for the U.S. as it is the largest stimulus package to become enacted in the history of the country. One of the most popular benefits the Act provides is the economic impact payments that are given to most households and individuals. Single tax filers will receive $1,200, while married couples who file jointly will receive $2,400. Each child that an individual or married couple has that is under 17 will receive an additional $500.

The economic impact payments have greatly helped those who have lost their jobs or have had their hours reduced because of the pandemic. However, for many households, the economic impact payments may not be enough to make the monthly obligations for all of their debts. To file for bankruptcy, you have to meet certain income requirements, which has led some to worry about how the economic impact payments will affect their status.

Temporary Changes to the Bankruptcy Code

When an individual files for bankruptcy, their income and assets are examined to determine if they are eligible for bankruptcy. To ensure all bankruptcy trustees are on the same page, the U.S. Trustee Program (USTP) issued a notice to address these issues that may arise because of the pandemic.

The notice stated that the economic impact payments are not to be included as “current monthly income” or “disposable income.” More specifically, the economic impact payments should not be used in any calculations to figure a person’s income and should not be included as a factor in determining whether or not a person can repay his or her debt in Chapter 7 or Chapter 13 bankruptcy. The notice also states that any trustee that attempts to recover the economic impact payments to become a part of the bankruptcy estate must notify the USTP before doing so.

Our San Antonio, TX Bankruptcy Attorney Is Here For You

The idea of getting a bankruptcy can be daunting to some, but sometimes it is the best option. At the Law Offices of Chance M. McGhee, we understand that you may be concerned about your eligibility for bankruptcy with all of the changes that have taken place. Our skilled New Braunfels, TX bankruptcy lawyer can answer any questions that you might have about your eligibility or even just about bankruptcy in general. To speak with an attorney about your case, call our office today at 210-342-3400.

Sources:

https://www.justice.gov/ust/file/cares_act_recovery_rebate_notice.pdf/download?fbclid=IwAR1FVLAkidW9nd5F8lAzAJ4EzJLrgj8_Ok-eIXKxvVxJQGH5GBou1d-kui0

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text?q=product+actualizaci%C3%B3n