Chapter 13 Stimulus Check

On March 27, 2020, the Federal government enacted the Economic Security Act (“CARES ACT) because of the covid-19 pandemic. The Federal Government will pay Marylanders at least $1,200.00. Should you be worried sending your funds to creditors if you have filed bankruptcy under either a Chapter 7 or Chapter 13 provision under federal law.

Information is floating around the public as far as how these funds should be sent to individuals in the United States. Initially, if a person is eligible if they filed a tax return in 2018, that person would collect $1,200.00 and 2,400.00 if the couple filed jointly in their most recent tax return filed with the IRS. Moreover, if the person has a child, that person would receive $500.00 if he/she is eligible under the Act. For married parents who filed jointly, if the married parents receive an income greater than $150,000.00, the total fund that the married parents would collect would be reduced by 5%. If person who is characterized as head of household and earns over $112,500 would be reduced by 5%. Anyone who does not qualify for the two circumstances previously described their amount would be reduced by 5% if they earn an amount of $75,000.00.

A debtor put forward in consideration a payment plan for 3-5 years to make some payment toward the debtor’s liability in Chapter 13 cases. The debtor must disclose all payments made to him/her as “disposable income.” However, under the CARES Act, the stimulus money is shielded from being part of disposable income in a Chapter 13 case where it meets the definition that this stimulus money is not part of disposable income. Under the CARES Acts, this law applies before or after when the Act took effect.

Once the Court has signed an order in a Chapter 13 bankruptcy case, the payment plan is confirmed by the Court. The plan can only be modified according to the Bankruptcy Code. What do you do if your hours are reduced at work or all of sudden becomes unemployed due to the coronavirus pandemic?

The CARES Act would be invoked in those circumstances as described above. Initially, the Act permits a debtor to modify a Chapter 13 plan which was already confirmed by the Court if there are circumstances where the debtor has experience or is experiencing a material financial hardship, indirectly or directly, form the covid-19 pandemic. This Act provides broad language which a debtor can be approved due to the coronavirus financial hardship scenario.

Furthermore, the CARES Act has another change in Chapter 13 bankruptcy process. Usually, Chapter 13 does not go beyond the 5-year mark. However, under the CARES Act, Chapter 13 can be modified where the plan can go to 7 years as well as reducing the payments so that way it would be less of a burden financially to make payments due to the coronavirus pandemic. The coronavirus pandemic has a disastrous effect on Marylanders, and the CARES Act does provide some relief to Marylanders involved in the bankruptcy process. Should have any questions or concerns, please do not hesitate to call the Soubra Law Firm at 301-219-5038. We will be happy to help.

As your Frederick Bankruptcy Chapter 13 Attorney during the coronavirus pandemic, the Law Firm is here to serve Frederick, Montgomery, Washington, and Carroll Counties as well as the remaining Maryland area. The Firm would like to be your Bankruptcy Chapter 13 Lawyer during the coronavirus pandemic.