CARES ACT and Consumer Debtors

CARES ACT and Consumer Debtors

The Coronvirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. The CARES Act provides temporary relief to consumers and Bankruptcy Debtors. The relief will expire on March 27, 2021, unless extended. The following is information regarding how the CARES Act affects consumers and Chapter 7 and 13 Bankruptcy Debtors.

Stimulus Checks

Many people are eligible for stimulus checks under the CARES Act. These are one-time only payments. The first stimulus checks were direct deposited into consumers’ bank accounts on April 11th. The first paper stimulus checks were mailed to consumers on April 24th.

How Much are the checks?

Individuals with an adjusted gross income less than $75,000 will receive $1,200.00. Individuals with an AGI more than $75,000.00 but less than $98,000.00 will receive between $950 to $200.

Married couples with an AGI of less than $150,000 will receive $2,400.00. Married couples with an AGI of more than $150,000.00 but less than $198,000.00 will receive between $1,900.00 and $400.00. 

Families receive an additional $500.00 per child. The child must not be over 17 years of age. There is no additional $500.00 for an adult child or elderly relative claimed as a dependent. 

Head of household with an AGI of less than $112,500.00 will receive $1,200.00. Head of household with an AGI of more than $112,500.00 but less than $136,500 will receive between $950.00 and $200.00.

Creditor protection?

Unfortunately, Congress did not protect stimulus checks from judgment creditors. As such, an individual’ whom has a judgment against him is at risk of losing the stimulus check. A judgment creditor may seize a stimulus check by garnishing the judgment debtor’s bank account.

Bankruptcy and stimulus checks

The CARES Act excludes stimulus checks from Chapter 7 and 13 Debtors’ calculation of current monthly income. As such, the stimulus check is not listed as income when completing the Means Test form.

However, the CARES Act does not protect stimulus checks from liquidation in Bankruptcy. A stimulus check may be lost to the Chapter 7 Bankruptcy Trustee unless the Debtor has an exemption available to protect it. For instance, a wildcard exemption which may be used on any type of property.

Chapter 13 bankruptcy and the cares act

The CARES Act permits Chapter 13 Bankruptcy Debtors to extend their confirmed plans to a total of 7 years. Ordinarily, a Chapter 13 Bankruptcy plan may not exceed 5 years. Chapter 13 Debtors with confirmed plans as of March 27, 2020, may seek additional time. Such Debtors must show a “material financial hardship” as a result of COVID-19 in order to receive the additional time.

If you are in need of bankruptcy assistance or have questions about bankruptcy, please call (772) 873-7794 to schedule a free consultation.

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Covid-19 Update

The Law Office of Brent M. Myer, PLLC will continue to provide bankruptcy and debt collection defense services despite the coronavirus pandemic.  
 
However, all consultations and/or meetings will be conducted by telephone in order to ensure the safety of you, my staff, and myself.
 
Documents and financial records will be exchanged and reviewed by use email, text, and conventional mail.
 
Call (772) 873-7794 to schedule a free telephone consultation.