When the country is under a pandemic, it results in situations where the economy essentially shuts down. People are unable to work and may even lose their livelihoods. It can create serious damage to personal finances that will naturally lead to an increase in bankruptcy filings.
According to the National Law Review, in such a situation, the government may make laws that change or alter the bankruptcy code to offer better protection for filers. The COVID-19 Bankruptcy Relief Extension Act is one such law.
The COVID-19 Bankruptcy Relief Extension Act was put into place to extend the changes made under the temporary Coronavirus Aid, Relief, and Economic Security Act, which had an expiration date. The extension occurred due to the pandemic not coming to a swift end as anticipated.
However, the extension did not cover everything in the original act.
Impact of the bill
The extension did carry on some important aspects that can benefit anyone filing for bankruptcy. It exempted any stimulus payments as property a person must claim when filing. It included many provisions to help protect individuals filing due to foreclosure actions.
The extension allowed for adjustments to cases for those who filed a Chapter 13 bankruptcy prior to the pandemic. This is important since Chapter 13 involves a repayment plan based on income, which may have changed due to the pandemic.
The government understands a pandemic can drastically change individuals’ financial situations. When bankruptcy is the only option for help, laws, such as the COVID-19 Bankruptcy Relief Extension Act, can make things easier and relieve the strain of having to file.