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How Has the Federal CARES Act Affected Bankruptcy Cases in Florida?
The coronavirus pandemic has been a series of unprecedented events, one after another. The effects of the pandemic have hit the United States so hard that Congress passed the largest stimulus package in U.S. history, worth more than $2 trillion. The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, is a record-breaking relief package that has helped millions of Americans, small businesses, and various levels of government. The Act was so wide-reaching that it touched many areas of American society, including the Bankruptcy Code. If you are considering filing for Bankruptcy in Florida, it is imperative that you understand the impact the CARES Act may have on your case.
The CARES Act and Bankruptcy Cases
The most well-known portion of the Act is the part that provides for economic impact payments to many American households and individuals. The Act authorized monetary payments of up to $1,200 for people who filed an individual tax return and up to $2,400 for couples who filed a joint tax return. In addition, for each child a person or a couple has under the age of 17, they will receive an additional $500. These amounts apply to single filers whose annual income is up to $75,000 and married couples filing jointly whose income is up to $150,000.
The issuance of those economic impact payments caused questions to arise concerning Chapter 7 and Chapter 13 bankruptcies. Should stimulus payments be included in calculations for current monthly income or projected disposable income? Should the payments be considered the property of the bankruptcy estate?
Temporary Changes to the Bankruptcy Code
In a recent notice issued by the U.S. Trustee Program (USTP), these issues have been addressed. The CARES Act specifically states that the economic impact payments that were given to millions of Americans are excluded from being considered “current monthly income” or “disposable income.” The notice also stated that the money received from the government because of the pandemic should not be included in any calculations to determine income or a debtor’s ability to pay a creditor in Chapter 7 or Chapter 13 bankruptcy cases.
The CARES Act does not technically address whether or not the economic impact payments are property of the bankruptcy estate. However, the USTP states that it is highly unlikely that the payments would be considered part of the estate after all relevant factors are considered. The USTP has instructed all bankruptcy trustees that they must inform debtors prior to taking action to recover any payments.
Contact a Broward County Bankruptcy Attorney
Going through Bankruptcy at any time can be stressful, but it may be especially challenging when changes to laws and policies take place in the midst of your case. At Elliot Legal Group, P.A. we understand how complicated the bankruptcy laws can be, and we will guide you through every step of your case. Contact our knowledgeable Fort Lauderdale, FL bankruptcy lawyer at 561-832-8288. Call our office today to schedule your free, confidential Bankruptcy consultation.
Sources:
https://www.justice.gov/ust/file/cares_act_recovery_rebate_notice.pdf/download?fbclid=IwAR1FVLAkidW9nd5F8lAzAJ4EzJLrgj8_Ok-eIXKxvVxJQGH5GBou1d-kui0
https://www.investopedia.com/coronavirus-aid-relief-and-economic-security-cares-act-4800707
