President Biden Signs the “COVID-19 Bankruptcy Relief Extension Act” | Genova Burns LLC
On March 27, 2021, President Biden signed the “COVID-19 Bankruptcy Relief Extension Act”. The legislation will extend until March 27, 2022, the personal and small business bankruptcy relief provisions that were part of last year’s CARES law.
Some of the key provisions of the expanded law are as follows:
- Increased eligibility for Small Business Reorganization Act (SBRA) for companies reporting under Subchapter V of Chapter 11. The SBRA makes Chapter 11 a much more streamlined and inexpensive process. Until March 27, 2022, companies with debt up to $ 7,500,000.00 are eligible to file a sub-chapter V file of chapter 11.
- Modify the definition of “income” in the Bankruptcy Code for debtors in Chapters 7 and 13 to exclude payments related to the coronavirus for the purpose of filing for bankruptcy.
- Clarify that the calculation of disposable income for the purposes of confirming a Chapter 13 plan will not include payments related to the coronavirus.
- Explicitly allow individuals and families currently covered in Chapter 13 to request changes to the payment plan if they experience significant financial hardship due to the coronavirus pandemic, including extending their payments to seven (7) years after the end of the initial payment of the plan.
All experts predict the financial fallout from the COVID pandemic will continue. The extensive provisions of the CARES Act are intended to facilitate the process for businesses and families forced to seek protection under the Bankruptcy Code.