COVID-19 Changes American Life, Bankruptcy Code
The coronavirus pandemic has changed the way of life for all Americans. Children can no longer go to school To slow the spread of the virus, only essential workers can go to work. While many can work remotely, many—such as restaurant workers and others who deal with the public—are being laid off in droves. With more than 10 million Americans filing for unemployment benefits during the last two weeks of March, the American economy is trying to figure out how to cope.
While stimulus checks are set to go out to taxpayers in the next few weeks—an individual can receive up to $1,200, depending on their income, plus $500 per minor child—this money will likely be too little, too late. So what’s next for Americans? For many, it’s bankruptcy.
Financial experts already know that bankruptcy will happen for many laid off workers. After all, most Americans live paycheck to paycheck. Without any savings, millions of Americans are struggling right now. While many lenders and landlords are waiving rent and mortgage payments and allowing people to stay in their homes for the time being, not every bill collector is so generous. Utilities and car payments still need to be paid. Families need food and other household items.
So when will these bankruptcies happen? Some are already starting the process, but it’s expected that once those without jobs spend all their savings and max out their credit cards—most likely within a few months—bankruptcy filings will increase. Bankruptcies are expected to increase in April, and by June, they will reach their highest point.
Changes to Bankruptcy Law
At the end of March, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). You may know this as the stimulus package, which consists of $2 trillion in relief to American families and businesses. What you may not know is that the CARES Act also revises the U.S. Bankruptcy Code.
While many of the changes apply only to businesses, consumers will get relief as well. There are two key changes. First, Chapter 13 debtors with existing repayment plans who have suffered financial difficulties due to the coronavirus can seek plan modifications. For example, they can extend their payments for up to seven years after their first payment, which can reduce their monthly payment. The second major change is that payments that individuals receive from the stimulus package will not count as “income” for eligibility purposes or “disposable income” for repayment plan purposes.
Contact a Coral Springs Bankruptcy Attorney
With the coronavirus taking over the world, people are being forced to stay at home. Businesses are shutting down. Unemployment is at its highest since 2008.
This is a prime time for bankruptcy, and in the coming months, many people could lose their homes and other possessions. Fortunately, the Coral Springs bankruptcy attorneys at the Law Offices of Barry S. Mittelberg, P.A. can help you during this difficult time. We know the laws that apply and can help you get the relief you need. Schedule a free consultation by calling (954) 752-1213.