The COVID-19 pandemic hit the United States with force in March 2020. As the virus rapidly spread, the federal government responded with temporary changes to the Bankruptcy Code through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). 

As the original timeline of the CARES Act draws to an end, the House of Representatives, in a 399-14 vote, passed a bill extending Covid-19 bankruptcy relief provisions originally passed in the CARES Act until March 27, 2022.

Key Provisions of the Bill:

  1. Ensures that COVID-related relief payments are not seized by creditors but remain in the hands of debtors to be used as relief, by excluding those payments as "income.”

This is to exclude “payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act with respect to the coronavirus disease 2019 (COVID-19).” This CARES Act amendment allows debtors to exempt income related to COVID-19 from the calculation of their current monthly income. On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA 2021), which expanded the protection of coronavirus relief payments by explicitly excluding them from the property of the bankruptcy estate. This ensures that consumers will not need to utilize an exemption to retain the relief payments

  1. Delays court-ordered payment plans used to escape Chapter 13 bankruptcy.

The CARES Act further amended the Bankruptcy Code to allow pre-COVID-19 Chapter 13 plans to be modified for a debtor’s financial hardships resulting from the pandemic. Additionally, under the CARES Act, Chapter 13 plans that were confirmed prior to the COVID-19 pandemic can be extended from the prior maximum plan period of five years to a period of seven years, resulting in the reduction of debtors’ monthly plan payment amounts.

  1. Ensures that families having been involved in bankruptcy proceedings are still eligible for mortgage forgiveness and eviction moratorium.

As for eviction moratorium, landlords are barred from the initiation of proceedings to evict a tenant from property securing federally backed mortgage loans or federally backed multifamily mortgage loans for nonpayment of rent or charging tenants fees, penalties, or other charges related to nonpayment of rent for a period of 120 days after March 27, 2021.

As the Bill is now in the Senate, further updates will come.

If you need help understanding your rights in the complicated bankruptcy process, contact the experienced bankruptcy attorneys at Goosmann Law in our Sioux City, Sioux Falls, and Omaha offices. 


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