What is changed in bankruptcy laws under the CARES act?

CARES Act Changes to the Bankruptcy Code

Congress made a few important changes to the bankruptcy laws. Here’s a summary of what’s changed.
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Last Reviewed: Sun, Aug 2, 2020

The provisions of the CARES act have now sunsetted. 

On March 27, 2021, just hours before the CARES Act bankruptcy provisions were about to sunset, President Biden signed COVID-19 Bankruptcy Relief Extension Act of 2021, Pub. L. No. 117-5 (Mar. 27, 2021) (H.R. 1651). The bill extended the temporary bankruptcy provisions under the CARES Act for an additional year, until March 27, 2022.

That date has just passed.

The NCLC put out a handy "cheat sheet" to help bankruptcy attorneys and debtors keep track of all the various provisions and when they expire. (also available as a PDF - table)

The sunset provisions in the CARES Act were extended for an additional year by the COVID-19 Bankruptcy Relief Extension Act of 2021, Pub. L. No. 117-5 (Mar. 27, 2021)
CAA = Consolidated Appropriations Act of 2021, Pub. L. No. 116-260 (Dec. 27, 2020)
CARES Act = Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 (Mar. 27, 2020)

Summary of COVID Relief Provisions

Provision Bill Section BK Code Section Sunset

COVID stimulus payments (recovery tax rebates) are not property of the estate

CAA, div. FF, tit. 10, § 1001(a)

11 U.S.C. § 541(b)(11)

Dec. 27, 2021

COVID-related payments, including recovery tax rebates and child tax credit payments, are excluded from current monthly income

CARES Act, § 1113(b)(1)(A)

11 U.S.C. § 101(10A)(B)(ii)(V)

Mar. 27, 2022

COVID-related payments, including recovery tax rebates and child tax credit payments, are not disposable income –

CARES Act, § 1113(b)(1)(B)

11 U.S.C. § 1325(b)(2)

Mar. 27, 2022

COVID stimulus payments (recovery tax rebates) are not subject to the “operation of any bankruptcy or insolvency law”

CAA, div. N, § 272(d), [amends Internal Revenue Code, adding new 26 U.S.C. § 6428A]

N/A

Dec. 27, 2021

Chapter 13 debtor may seek plan modification, if the plan was confirmed before Mar. 27, 2021 and the debtor is experiencing a COVID-related hardship, that would extend plan payments for up to seven years after initial payment on original plan was due

CARES Act, § 1113(b)(1)(C)

11 U.S.C. § 1329(d)(1)

Mar. 27, 2022

Chapter 13 debtor may seek an early discharge if the debtor has missed three or fewer mortgage payments due to a COVID-related hardship or has entered into a loan forbearance or modification –

CAA, div. FF, tit. 10, § 1001(b)

11 U.S.C. § 1328(i)(1)

Dec. 27, 2021

Debtor who is in a pending bankruptcy or has received a discharge cannot be denied a mortgage forbearance, protection under the foreclosure and eviction moratorium, and related relief provided under the CARES Act –

CAA, div. FF, tit. 10, § 1001(c)

11 U.S.C. § 525(d)

Dec. 27, 2021

Mortgage servicer may file a “CARES forbearance claim,” which is a supplemental proof of claim for the amount forborne under a loan forbearance granted to a debtor under the CARES Act –

CAA in div. FF, tit. 10, § 1001(d)

11 U.S.C. § 501(f) and § 502(b)(9) (claim must be filed no later than 120 days after expiration of forbearance)

Dec. 27, 2021

Debtor and any party, including a mortgage creditor, may move to modify the debtor’s plan to provide for a CARES forbearance claim

CAA div. FF, tit. 10, § 1001(e)

11 U.S.C. § 1329(e)

Dec. 27, 2021

Debtor may have utility service maintained or restored after filing bankruptcy without paying a deposit, as long as the debtor pays for postpetition service –

CAA div. FF, tit. 10, §1001(h)

11 U.S.C. § 366(d)

Dec. 27, 2021

 

Legal Consumer - Bakersfield, CALaw. Jurisdictional relevance: The content of this article pertains to all US states and counties.
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