Chapter 7 Stimulus Check
President Trump signed the Economic Security Act (“CARES ACT) on March 27, 2020 due to the covid-19 aid. Marylanders can receive at least $1,200.00 payment from the Federal Government. If you are in a middle of a Chapter 13 or Chapter 7, should you be concerned that these funds may go to your creditors?How do You Receive the Stimulus Check?
There are a lot of rumors on how these funds can be distributed among the US population. Initially, if a tax return filed by the eligible person, that person would collect $1,200.00 and 2,400.00 for couple who filed jointly. Furthermore, for each child, that parent would collect $500.00 that qualify under that program. For a couple for filed jointly, if the couple earns greater than $150,000.00, the amount that they would receive would be reduced by 5%. A person who filed 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.In Chapter 7, how are Stimulus Checks Protected Under the Cares Act?
In Chapter 7, when it involves the Means test, the Cares Act does state how the stimulus checks should be treated. In determining the Means test, it uses all of the debtor’s income prior to 6 months filing of bankruptcy and using the household size to determine what the median income should be. If a person median income is over the presumption of abuse in a Chapter 7 case, which the debtor has to pass the Means test or file a Chapter 13 case.
Under the CARES Act excludes the stimulus checks as income in terms for bankruptcy purposes. The stimulus money will ultimately be used for household expenses like car payments, mortgage, utilities, housekeeping, and food.