As you have probably heard, our representatives on Capitol Hill recently came together and passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. There are some interesting repercussions directly related to bankruptcy law that we want our readers and clients to be aware of.
First off, here’s the one that everyone’s talking about: the direct deposits. All Americans who pay taxes will receive a one-time direct deposit of up to $1,200. Married couples will receive $2,400, plus an additional $500 per child. While the exact payments will vary, Washington Post has set up a handy tool for determining your eligibility.
Another big perk of this bill is that all testing (as well as potential vaccines) for COVID-19 will be covered at no cost to patients. This is very good for two reasons: it means that people who are sick won’t have to pay out of pocket and that, with this in mind, more people are likely to get tested. Hopefully, this will help flatten the curve and put the U.S. on the path to recovery.
The CARES Act and Bankruptcy
But there’s more to this sweeping, trillion-dollar bill than the headlines on the evening news. This piece of legislation has major ramifications for people who have already filed bankruptcy.
For example, the bills allows modification of a chapter 13 plan duration to 7 years for debtors who have been affected by COVID-19. Note that this only applies to cases that have already been filed and confirmed and that this new rule will sunset in one year, reverting to its previous language.
The Act will also have a big impact on unemployment benefits. Until July 31, 2020, all regular Unemployment and Pandemic Unemployment Assistance claimants will receive their usual benefit plus an additional $600 per week. Business Insider has a handy step-by-step guide on applying for Unemployment Benefits. There’s no separate application for the extra $600.
In addition, student loan payments will be put on automatic suspension. However, this only applies to student loans held by the federal government. These payments are suspended until Sept. 30, 2020. While loan payments are suspended, interest will not accrue.
And if you own a small business, you may qualify for an Economic Injury Disaster Loan advance of up to $10,000. This program is aimed at small businesses with fewer than 500 employees; to qualify, your business must be affected in some way, shape, or form by COVID-19. To apply for this aid, follow this link to the SBA’s official website.
Like I said at the beginning of this post: this bill is huge, and there are tons of great articles doing deep dives into the ins and out of the legislation.
But, big as this bill is, you can only cover so many bases in one go. Utilities are still due, after all, and it will depend largely on states and local municipalities to fill in the inevitable gaps that arise. For more information as it develops, stay tuned to this blog and get regular information on all COVID-19 related aid and legislation.