CARES Act

05/08/20

During these unprecedented times, many individuals and businesses are experiencing a substantial decrease in income resulting in difficulty making certain payments such as mortgage, rent and other obligations. Our firm can assist those that may find themselves in financial hardships, especially in light of the new bankruptcy rules and regulations that were implemented earlier this year to benefit those that have been economically impacted by the COVID-19 Pandemic.

Under Chapter 7 and 13 bankruptcy proceedings, the CARES Act has modified the definition of “Current Monthly Income” to exclude any payments that a debtor may have received from the federal government as part of the COVID-19 Stimulus Package. This is vital because a debtor’s monthly income determines which type of proceeding he or she may qualify for (i.e. liquidation under Chapter 7 or a repayment plan under Chapter 13). Moreover, the CARES Act allows Chapter 13 filers to amend an existing repayment plan by asserting a material financial hardship resulting from the COVID-19 Pandemic.

To assist small businesses, the Small Business Reorganization Act (SBRA) was incorporated to the bankruptcy code to streamline Chapter 11 filings as well as to increase the ability for debtors to reorganize. To qualify for a Chapter 11 proceeding, debtors previously could not have debts exceeding $2,725,625; however, this limit has been temporarily increased under the SBRA to $7,500,000 which will allow for additional businesses to reorganize. Moreover, this act may allow a debtor to retain control of its business and pay creditors over a longer period of time.

If you or your business are experiencing financial difficulties during this time, please do not hesitate to contact us for a complementary initial consultations. Please stay safe and well.