Pandemic-Related Legal Issues
If you’re like many Americans, the pandemic has hit your pocketbook pretty hard. Though the CARES Act and second stimulus package have helped many stave off bankruptcy for now, it may yet become one of your best options. Here are some things to know about bankruptcy law as it relates to the coronavirus pandemic.
Chapter 13 Bankruptcy Reorganization Periods May Be Extended
Under Chapter 13 of the bankruptcy laws, you can receive the benefits of the automatic stay, which prohibits creditors from attempting to collect a debt in any way except through the bankruptcy proceeding. That means no calls, letters or legal action. A Chapter 13 reorganization lets you work out new payment arrangements with your creditors and make payments over a three-to-five-year period.
Under the CARES Act (the first stimulus package), a Chapter 13 debtor may ask the bankruptcy court to extend that repayment period to seven years. To get an extension, you’ll need to provide notice to your creditors and schedule a hearing, and you’ll have to show a material financial hardship due to the pandemic.
Stimulus Payments Will Not Count Toward Monthly Income
To qualify to permanently discharge debt under Chapter 7, you must submit to a means test and demonstrate to the bankruptcy court that you lack the means to repay your creditors under Chapter 13. The means test uses your monthly income to determine whether or not you qualify. Under the CARES Act, stimulus checks and other payments from the federal government or pursuant to federal laws do not count as monthly income.
Debtors Do Not Need to Meet with Creditors in Person
Before the pandemic, debtors filing under Chapter 7 or Chapter 13 were required to attend a Section 341 meeting of creditors. Those meetings may now be conducted by phone or videoconference.
Contact an Experienced Rockwall, Texas, Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. I am currently communicating with clients by phone, text message, and videoconference. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.
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