People who receive coronavirus disease-related benefits before filing for bankruptcy don’t need to worry that the funds will affect their ability to qualify. Section 1113 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) indicates that the following are not reportable as part of current monthly income or disposable income when filing for bankruptcy:
…payments made under the Federal law relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus disease 2019 (COVID-19).
The changes will remain in effect for one year.
Filers must use newly-revised Official Bankruptcy Forms incorporating the changes to the Bankruptcy Code. The forms aren’t available on the U.S. Court Bankruptcy Forms webpage (as of the writing of this update) but can be found by following the links below.
Learn more about qualifying for bankruptcy in The Bankruptcy Means Test: Are You Eligible for Chapter 7 Bankruptcy and Are You Eligible for Chapter 13 Bankruptcy?
You’ll find additional coronavirus legal developments on COVID-19: The Law and Your Legal Rights During the Coronavirus Outbreak.
Effective: March 26, 2020