North Carolina Chapter 13 Bankruptcy Plan Payments & COVID-19
In addition to the tremendous effect that COVID-19 had on the healthcare industry, it also affected the American economy. These effects will likely be felt for many years to come, so it is important that debtors understand protections that can help ease the financial burden.
History of COVID-19 Bankruptcy Relief
In response to COVID-19, the federal government passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Among other provisions, the CARES Act provided certain protections and benefits to bankruptcy debtors.
These protections include:
- Chapter 13 debtors who had confirmed plans before the date the CARES Act was enacted were able to seek a modification of their plan due to COVID-19-related financial hardships. The plan could be extended up to seven years after the first payment under the original confirmed plan was due. The modification can provide for the payment of post-confirmation defaults and unpaid installments from a mortgage or loan forbearance.
- Debtors must attempt to modify their plan before being able to request a hardship discharge before completing all confirmed plan payments.
- Income from COVID-19-related payments was excluded when calculating plan payments.
- Eligibility for the Small Business Reorganization Act, which makes the process of applying for bankruptcy relief less expensive and more streamlined for small businesses, was increased from a maximum debt load of $2,725,625, up to $7.5 million
A year later, President Biden signed the COVID-19 Bankruptcy Relief Extension Act into law, which extended many of these provisions to March 27, 2022.
Options to Adjust Chapter 13 Bankruptcy Plan Payments Due to COVID-19 in NC
If you are struggling with making payments under your Chapter 13 confirmed plan, here are some options that might be available to ease the financial burden:
- Seek a modification of the plan. It may be that the plan payments can be reduced based on changes to your budget or based on surrendering collateral that is being paid through trustee disbursements. Our team can assess your current financial situation, COVID-19 related relief, and options that are available to help if you are struggling with payments.
- Convert the case from Chapter 13 to Chapter 7. There are many limitations and considerations to evaluate, but this is an option worth reviewing.
- Allow the case to be dismissed. If you may be able to receive a more affordable payment plan option with a new bankruptcy filing, it may be worth considering dismissing your current case and filing a new one.
Contact The Experienced Bankruptcy Attorneys in Cary, NC at Sasser Law Firm for Help
Sasser Law Firm is committed to quality representation from the filing of a Chapter 13 case through its completion. As always, contact us if you have questions about your bankruptcy filing in North Carolina. We want to help during this challenging time.
This post was originally published in March 2020 and has been updated for accuracy and comprehensiveness in August 2021
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For more than 20 years, the Sasser Law Firm has been helping individuals and business owners sort through financial hardships to see the light at the end of the tunnel. Our North Carolina bankruptcy attorneys are all board-certified specialists, which means we have passed a complex exam, undergone a thorough peer review, and continue to earn legal education credits in this ever-evolving area of law.