April 9, 2020 | Bankruptcy, Chapter 13, Chapter 7, General

The outbreak of coronavirus COVID-19 has caused people around the world to experience a level of stress and fear they likely never expected to feel in their lifetimes. The serious health scare and self-isolation aside, the pandemic has  led to a domino effect with seemingly lighting speed. Businesses have closed. People have been ordered to stay home. Workers have been furloughed or let go completely. Money is suddenly tight for everyone. The CARES Act might offer some relief. This blog will provide an overview of the legislation – and how our attorneys can help. 

We are all hoping the global economic impact of the coronavirus is temporary. But many are worrying about bills and bringing less money in as each day passes, with no real end in sight – at least for now.

Omaha Bankruptcy Lawyer

If you are considering bankruptcy due to the impact of COVID-19 – or for any reason – the Omaha bankruptcy attorneys at High & Younes can help you understand your options, including the recent changes in federal legislation. We are still taking new clients and are happy to speak to you over the phone or video call. Talk to an experienced bankruptcy attorney by calling 402-933-3345 today.

The CARES Act: What it Means for People Considering Bankruptcy

On March 27, 2020, the CARES Act was signed into law. The measure is a $2.2 trillion stimulus package designed to mitigate the widespread economic impact of the novel coronavirus, or COVID-19.

Three Important Bankruptcy Provisions

The CARES Act includes important temporary provision for bankruptcy cases, meaning they essentially have sunset clauses and won’t last forever. Each will expire in one year unless Congress votes to extend the deadline.

Disposable Income

To determine disposable income, the debtor or debtors are required to provide a record of all income for the last six months prior to filing. However, under CARES, government stimulus payments are excluded from the debtors’ income calculations. In other words, even though you will still be required to disclose whether you have received a stimulus check, the amount will not be factored into the government’s disposable income calculation.

Chapter 13 Modification

The CARES Act permits Chapter 13 debtors with plans that were confirmed as of the date of enactment of the legislation to seek modifications of their plan due to COVID-19-related hardships. Chapter 13 reorganization plans are capped at five years from the date of plan confirmation. However, CARES adds subsection (d)(1) to 11 U.S.C. 1329 to permit a debtor to modify a confirmed plan after a notice and a hearing, if such debtor is experiencing a “material financial hardship” due “directly or indirectly” to the COVID-19 pandemic. Under the Act, a plan also may be modified to extend the plan period up to seven years after the first payment under the original confirmed plan became due.

 Small Business Reorganization

 The maximum debt level for small businesses seeking to reorganize under Chapter 11 will temporarily increase from $2,725,625 to $7,500,000. This may make Chapter 11 reorganization more attractive for certain businesses who need access to relief from creditors.

 Get Help Today

Have a question about the Cares Act, bankruptcy, or any legal matter? Call the Omaha law firm of High & Younes today. Our team is ready to help you take back control and give you some relief. Call 402-933-3341 today.