How Covid-19 Has Changed Bankruptcy Law

The pandemic has pushed many people into a state of financial distress. People have lost jobs, or have been furloughed. Unemployment checks run out. The $1200 stimulus check from the early part of the pandemic is long gone. 

The economy isn’t getting better. People have gotten sick and have been unable to work. Those who have been struck down by the virus have racked up large medical bills. 

Personal bankruptcy remains a haven for people who are suffering from these events, all of which are well out of their control. Fortunately, bankruptcy law is changing to account for the massive amount of stress families are currently under.

Covid-19 Relief Payments and the Means Test

If you are thinking about filing Chapter 7 bankruptcy you should know that your stimulus payments and any extra unemployment relief won’t be calculated. 

You should ask your attorney to be sure you’re including everything that should be included, but you don’t have to worry that your relief money will push you over the limits.

Longer Chapter 13 Plans

If you’ve been impacted by the pandemic you may be able to ask your trustee to stretch your bankruptcy plan to seven years instead of to five. This amendment to the United States Bankruptcy Code was a result of the CARES Act

Extending the term of your bankruptcy plan means your payments can go lower, which can provide some financial relief.

Keep in mind if you can’t make your payments your bankruptcy case will be dismissed, so this will need to be a priority if you wish to keep your Chapter 13 status.

What about Loan Forbearance?

No legislation has extended your home mortgage loan forbearance any more than it was already extended, which means your home loan forbearance payments could be coming due. 

If you can’t make your forbearance payments remember that a Chapter 13 bankruptcy may help you save your home.

Need Help?

Our office exists to help families in Orange County, NY and Goshen, NY navigate difficult financial situations that are beyond their control. If Covid-19 has sent your family into a financial tailspin, you don’t have to go it alone. Contact Simon Haysom, Attorneys at Law, to get a free bankruptcy consultation today.

See also:

Can I File for Bankruptcy in New York if I Am Unemployed?

7 Signs You Should File Bankruptcy

What to Do If You Can’t Make Your House Payments During Covid-19

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