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The COVID-19 pandemic directly affected many American business, families and individuals. The social distancing guidelines that followed the pandemic caused many businesses to shut down and fail. Many Americans lost their jobs.

In order to alleviate some of the economic effects of the COVID-19 pandemic, the U.S. Government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act introduced a few important revisions to the U.S. Bankruptcy Code. Some of the revisions relate directly to Chapter 7 and Chapter 13 bankruptcies. The bankruptcy related provisions of the CARES act are good for only one year and will expire on March 27, 2021.


In Chapter 13 bankruptcy, an individual may propose up to a five years reorganization plan. Under the CARES Act, Chapter 13 bankruptcy plans that were confirmed before March 27, 2020 may be extended to up to seven years if the debtor is facing financial hardship as a result of the pandemic. The term extension will reduce the monthly payment obligation, thereby making these payments more affordable.

In addition, all Coronavirus-related payments received under federal law shall not be counted toward an individual income when calculating eligibility for Chapter 7 or Chapter 13 bankruptcy. The Coronavirus related payments are exempted from the calculation of disposable income for purposes of confirming a Chapter 13 bankruptcy plan.

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