As the COVID-19 pandemic sweeps through the United States, it’s important to understand the impact this will have on your bankruptcy filing. Whether you are going to file for Chapter 7 bankruptcy to get rid of unsecured debt, or you want to restructure your debt, COVID-19 has resulted in temporary changes to the bankruptcy law at this time.


The CARES Act, or the Coronavirus, Aid, Relief and Economic Security Act, is designed to help individuals, families and businesses avoid financial disaster because of COVID-19, lost jobs and closed businesses. Both the Chapter 7 and Chapter 13 bankruptcy codes have been changed for now, and it is easier for small businesses to structure their debt and come up with a payment plan under CARES Act protections.

What Can You Do If You Filed Prior to the CARES Act?

Individuals who have already filed for Chapter 13 bankruptcy can change their repayment plan under the CARES Act if their financial situation has deteriorated because of COVID-19. This means that if you are paying back debt in a structured plan but you are not able to meet your monthly obligation, you can restructure the debt into a payment you can afford. Up to seven years can be added to your repayment plan, making your monthly payments much lower.

If your financial situation is no longer conducive to a Chapter 13 bankruptcy, you can work with a bankrupty attorney to change your filing into a Chapter 7 bankruptcy because of COVID-19. The pandemic is causing a wide range of uncertainty, and the CARES Act is designed to give you the support you need during this difficult time.

Even when the court buildings are not open, it is still possible to file for bankruptcy. Bankruptcy lawyers can work with you to determine your unsecured debt and work through the paperwork that is necessary in order to file for bankruptcy. Courts are accepting filings by fax, mail or email, and you can meet with your attorney using virtual methods if necessary.

As you work on your bankruptcy, the CARES Act also protects any stimulus payments you might receive to help you take care of your daily needs. While you have to show disposable income when you are trying to restructure your debt, stimulus payments are not added into your disposable income. Any money you receive from Coronavirus relief will not cause you to become ineligible to file for bankruptcy.

The CARES Act and any subsequent legislation to deal with the financial fallout of the COVID-19 pandemic is designed to help those that can no longer meet their financial obligations and are looking for a way to manage debt that keeps growing. Work with bankruptcy lawyers to figure out what your current obligations are, and what would work best for you during this difficult time. While you may feel overwhelmed with financial problems, the CARES Act is designed to make it easier to get through this pandemic financially. At Clark & Washington, you can now file your bankruptcy over the phone without ever leaving the safety of your home.