The Coronavirus Stimulus Package contains three provisions that will positively affect the current Bankruptcy Statute for Consumer filings under Chapter 7 and Chapter 13.
Under a Chapter 7 Bankruptcy, (known as “Consumer Liquidation” preferred to be filed by Consumers meaning no payment at all to any Unsecured Creditors like credit cards, personal loans, past utility bills, medical bills, repossession shortfall amounts etc.), the funds an adult will receive from the Federal Government under the Stimulus Package cannot be treated as income when filing a Chapter 7 Bankruptcy Petition. When a consumer files a Chapter 7 Bankruptcy Petition they must list all their income, and if a consumer had to list any funds received from the government as income, it may preclude them from filing a Chapter 7 Petition. With the Bankruptcy Code overhaul in 2005 all filers must submit their gross income received by filling out a “Statement of Current Monthly Income/Means Test”. The income used is a monthly average of all Gross income in the previous 6 months before filing the Petition. If a filer is over the “State Median” income, then the Filer will most likely be unable to file a Chapter 7 Plan.
Under a Chapter 13 Bankruptcy, known as “Consumer Reorganization” (mandates some percentage up to a 100% payment to Unsecured Creditors like credit cards, personal loans, past utility bills, medical bills, repossession shortfall amounts etc.), the funds an adult will receive from the Federal Government under the Stimulus Package cannot be treated as income when filing a Chapter 13 Bankruptcy Petition. When a consumer files a Chapter 13 Bankruptcy Petition they must list all their income, and if a consumer had to list any stimulus funds received from the government as income it may increase the amount that would have to be paid back to the Unsecured Creditors. With the Bankruptcy Code overhaul in 2005 all Chapter 13 filers must submit their gross income received by filling out a “Statement of Current Monthly Income/Disposable Income”. The income used is a monthly average of all Gross income in the previous 6 months before filing the Petition. If a filer is over the “State Median” either before the stimulus funds or if a consumer now had to list any funds received from the government as income, it will increase the amount that will have to be paid back to the Unsecured Creditors by increasing the amount of funds available monthly known as DMI “Disposable Monthly Income. Additionally all present Chapter 13 Consumers may seek a modification of their present monthly payment plan including extending the repayment plan from 60 months up to 84 months.
Discussing your options with a New Jersey Chapter 7 and Chapter 13 Bankruptcy Lawyer, as we go through and upon exiting this never before seen in history event, will allow Consumers to be informed of their choices and options under the Federal Bankruptcy Code. It continues to be the hope of all involved with Creditor /Debtor Rights that the mortgage companies, credit card companies, utility providers, Car lending companies, unsecured Loan provider’s, cell phone carriers, internet / cable providers etc. will offer options to help all Consumers catch up on late payments or restructure payments, however if they do not then all Consumer need to know their rights for Debt Relief through Bankruptcy.
Discuss Your Options Under Chapter 7 or Chapter 13 with One of Our New Jersey Bankruptcy Law Firm in Confidence
To schedule a free, no-obligation consultation with the bankruptcy attorneys at Helmer, Conley and Kasselman, call us at 877-435-6371 or tell us how we can help online today.
