Over the past few months, you may have heard in the news about the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), which has resulted in items like the national stimulus checks, expanded unemployment insurance and the founding of the Coronavirus Relief Fund, amongst many other things. One major change that has come with the 2020 CARES Act, is a change to the official forms that are required to be filled out when filing for bankruptcy. While not every bankruptcy form has been changed, there are 5 that have been affected under the new 2020 CARES Act.
Chapter 11 Subchapter 5 Bankruptcy Form 101 and Form 201: Voluntary Petition for Individuals and Non-Individuals Filing for Bankruptcy
Bankruptcy Form 101 (individuals) and Form 201 (non-individuals) are the forms used for a voluntary petition for bankruptcy under Subchapter V of Chapter 11. On these forms, the 2020 CARES Act has increased the maximum debt threshold to qualify from $2,725,625 to $7,500,000 of secured and unsecured non-contingent and liquidated debt. This change helps many of those seeking to file Chapter 11 that have faced new financial struggles because of the COVID-19 pandemic file for Chapter 11 reorganization in Subchapter V without the lengthy procedure and expenses of the standard Chapter 11 filing. These changes will remain in effect until March 26, 2021.
Chapter 7 Bankruptcy Form 122A-1 and Bankruptcy Form 122B: Statement of Your Current Monthly Income
Under the CARES Act, the Bankruptcy Rules Advisory Committee has changed the definition, found on line 10 in both Form 122A-1 (used by individuals filing Chapter 7) and Form 122B (used by businesses filing Chapter 7) of “current monthly income” and “disposable income.” The change to the definition has been made to exclude any payments, income, or financial support received from the government under the Nation Emergencies Act. This allows those seeking to file for Chapter 7 not to worry about government support affecting their total income, potentially putting them over the Chapter 7 debt thresholds.
Chapter 13 Bankruptcy Form 122C-1: Statement of Current Monthly Income and Calculation of Commitment Period
Very similar to Forms 122A-1 and 122B, the change to Form 122C-1 also changes the definition on line 10 of “disposable income” and “monthly income” so that they do not include any financial support received from the government as part of the National Emergencies Act. This includes stimulus payments, financial support, or any additional benefits that may come as part of the government support.
Applying for bankruptcy with these new forms
If you find yourself in a situation where your financial struggles have become overwhelming because of COVID-19, bankruptcy may be the best option for you. With recent changes to bankruptcy guidelines, now may be the best opportunity for your bankruptcy case to be approved. Connect with a local bankruptcy attorney to discuss your specific financial details, or to learn how these recent changes under the CARES Act may impact your bankruptcy application process.