COVID-19 is changing the way people live, work, and socialize. The pandemic is also triggering a number of financial reforms designed to help individuals and businesses stay afloat during this uncertain time. If you need debt relief for coronavirus-related economic hardships, a bankruptcy attorney is a valuable resource. You should familiarize yourself with the bankruptcy process and understand how the pandemic is changing operations.

How COVID-19 Is Changing Bankruptcy

1. Relief Payments Don’t Count as Income

Workers meeting certain income requirements — $75,000 for single tax filers, $112,500 for head-of-household filers, and $150,000 for married couples filing their taxes jointly — received stimulus checks to help weather the economic challenges of COVID-19. Bankruptcy courts don’t consider these payments as income, so you don’t have to claim them as such on your Chapter 7 or Chapter 13 paperwork.

This consideration may bring down your income level to a lower bracket and help you qualify for bankruptcy. A bankruptcy attorney will explain the filing options and help you choose one that works best for your situation.

2. Chapter 13 Repayment Plans Can Exceed Five Years

Chapter 13 bankruptcy reorganizes debt into a long-term payment plan, while Chapter 7 eliminates most unsecured debts. Traditionally, Chapter 13 plans were repaid over three to five years.

In light of COVID-19, many courts are agreeing to extend that deadline to as much as seven years. However, this isn't an automatic option. You’ll have to demonstrate to the courts that the present financial hardship is due to the pandemic and that a longer time frame is critical for successful repayment.

3. Debt Limits for Businesses Have Been Increased

Chapter 11 bankruptcy lets businesses restructure their debts and finances. Since the onset of COVID-19, companies can file for Chapter 11 relief under the new Subchapter V of the Bankruptcy Code.

The debt limit has been increased from $2,725,625 to $7,500,000. Chapter 11 involves designing a detailed restructuring plan, and this increase will allow more businesses to benefit from careful reorganization.

A bankruptcy attorney will ensure you understand how COVID-19 affects your filing. Bristol Law Office has served southeast New Mexico for over 30 years. Attorney R. Matthew Bristol offers representation in a number of practice areas, including bankruptcies, estate planning, and family law cases. Call (575) 625-5284 or visit the website to schedule a consultation.