On March 27, 2021, the President signed the Covid-19 Bankruptcy Relief Extension Act into law. The Act extends various provisions that will continue to provide relief to consumers and small businesses that were impacted by the pandemic. It is designed to extend certain relief provisions that were included as part of last year’s CARES Act that will now continue through March 27, 2022, if not otherwise extended again.
Key Provisions of the Bankruptcy Relief Extension Act
- Extension of the increased debt limit in Subchapter V chapter 11 cases. This extension keeps the debt limit for Subchapter V chapter 11 cases at $7.5 million through March 27, 2022. This is an important aspect of the Act because it allows a number of small business debtors access to Subchapter V cases, which can provide numerous benefits as compared to a traditional case.
- Excluding coronavirus related payments received from being counted as “income” under chapter 7 and chapter 13 bankruptcy cases.
- Clarifying that disposable income in chapter 13 will not include coronavirus-related payments.
- Specifically permitting individuals in chapter 13 to seek plan modification if experiencing a material financial hardship due to the pandemic, including extending their payments for up to seven years after their initial plan payment was due.
