On Saturday, March 27, 2021, President Joe Biden signed the COVID-19 Bankruptcy Relief Extension Act providing financially troubled consumers and small businesses notable bankruptcy relief until March 27, 2022.

As the bankruptcy provisions of the CARES Act originally were to end on March 27, 2020, the House of Representative and Senate passed the extension, while only striking a provision that would have extended the bankruptcy provision of December’s Consolidated Appropriations Act of 2021.

House Judiciary Committee Chairman Jerrold Nadler states, “This urgently needed bill ensures that families and small businesses do not lose access to these economic lifelines, keeping more families in their homes and allowing more small businesses to thrive. Extending these necessary protections until March of next year will also provide much-needed certainty that the bankruptcy system will remain responsive to debtors and creditors alike during this extraordinarily disruptive crisis.”

Key bankruptcy provision extended to 2022 include:

1. COVID-19-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


2. 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.


3. 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.

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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