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Information regarding chapter 13 plan extensions, suspensions, and CARES Act payments

CARES Act payments to chapter 13 debtors

The CARES Act provides for emergency payment of up to $1200 per adult plus additional amounts for children. Debtors are free to use those funds as needed and do not need to file “motions to disburse” or “motions for instructions” regarding those payments.

 

CARES Act plan extensions

The CARES Act allows chapter 13 debtors whose cases were confirmed on or before 3/26/20 and who are experiencing or have experienced material financial hardship due to the coronavirus to extend their plans for up to 7 years (84 months).  This window to seek a plan extension expires a year from enactment. 

The court has modified the event for coronavirus-related extensions.  The event is under the regular motion to modify a confirmed plan, but under "change the term of the plan" there is a "between 67 and 84 months due to financial hardship caused by the COVID-19 pandemic" option.  The CARES Act choice will allow a requested extension of up to 84 months.

The CARES Act choice is limited to cases confirmed on or before 3/26/20.  IMPORTANT: If you are seeking to change the treatment of a secured claim as part of a CARES Act plan extension, you must also choose that dropdown and serve the affected secured creditor with the motion. 

 

Coronavirus-related chapter 13 plan payment suspensions

Here is what the judges are doing for the time being in response to the coronavirus pandemic (subject to change).  They will consider up to 2 motions to suspend by debtors affected by the coronavirus pandemic for a maximum of 3 months each during the pendency of the plan.  One suspension can be preconfirmation.  For noncoronavirus financial problems, the judge will consider postconfirmation motions to suspend up to 3 months and limited to one per plan.