The $2.2 trillion financial relief package President Donald Trump signed into law last week, called the Coronavirus Aid, Relief and Security (CARES) Act offers many Americans a break on their loans as the coronavirus slams the economy. CARES also makes the following changes to the bankruptcy code:
• The direct checks, dubbed “recovery rebates,” do not count as income that would get factored into a “means test” that determines is someone can file a Chapter 7 bankruptcy case.
• The recovery rebates also do not count as “disposable income” that could be applied to things like credit card debts in Chapter 13 cases.
• People who are already in Chapter 13 repayment plans and now experiencing financial hardship because of the outbreak have a one-year window to change repayment terms. They can extend their repayment timeframe up to two years longer.
• These bankruptcy-related provisions expire on March 27, 2021, one year after Trump signed the bill into law.
The provisions are really positive changes that will help consumers in debt access Chapter 7’s bankruptcy protections while also being able to use their recovery rebates, he said. The stimulus provisions will also let people in Chapter 13 plans use their direct checks, and will give them some extra time on plans that normally have to conclude within five years — they now can take up to seven years.