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We handle cases across the United States. Allen Stewart is licensed to practice law in Texas, California, New York, Pennsylvania, Missouri, North Carolina, Ohio and Arizona.

Bankruptcy and the CARES Act

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On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, a $2.2 trillion stimulus package designed to lessen the economic impact of the COVID-19 crisis.

The CARES Act impacts consumer bankruptcy cases in two major ways:

(1) The Act amends the definition of “income” to exclude coronavirus-related payments from the federal government. Similarly, the act also excludes coronavirus-related payments from the “disposable income” calculation under section 1325(b)(2). As a result, federal funds received in the form of federal stimulus checks cannot impact your entitlement to bankruptcy relief.

(2) Existing Chapter 13 debtors may be able to extend the term of their court approved repayment plans up to 7 years (84 months) from the date their first plan payment was due. In order to qualify for this extension, individuals must be suffering a “material financial hardship” as a result of COVID-19 and their bankruptcy plan must have been confirmed on or before March 26, 2020. It is currently unclear what courts will consider a “material financial hardship.” However, given the extraordinary economic impact of this virus, most will likely meet the standard.


These changes are temporary and if not extended will expire on March 27, 2021. We will continue to monitor the effects of the CARES Act on consumer bankruptcy cases. For more information relating to this and or other consumer bankruptcy issues please contact us.

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