How COVID-19 is Changing Consumer Bankruptcy Cases

Bankruptcy law can be complicated and confusing even when there is no pandemic affecting consumers across the country. With the COVID-19 pandemic resulting in substantial job loss, illness, and medical bills in the Chicago area and throughout Oak Park, many debtors are considering their options for personal bankruptcy. While most rules concerning bankruptcy filings have not changed, there are some important changes to note. Some of these changes are temporary, while others are not. We want to tell you more about some of the ways in which COVID-19 is changing consumer bankruptcy cases.

Passing the Means Test for Chapter 7 Bankruptcy
You might know that, in order to be eligible for Chapter 7 bankruptcy as an individual debtor (or if you are filing as a married couple with your spouse), that you must be able to pass something known as the “means test.” The means test considers a debtor’s income, monthly expenses, and family size to determine whether that debtor has enough disposable income that she or he may, over the course of time, be able to repay debts. The means test was designed to prevent liquidation bankruptcy abuse, and to ensure that only debtors with insufficient disposable income would be eligible for a liquidation bankruptcy discharge.

Since the means test involves looking at your disposable income, it is important for debtors to know that any stimulus check you receive through the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act will not count toward your disposable income.

Modifying a Chapter 13 Bankruptcy Repayment Plan
The CARES Act also provides options for Chapter 13 bankruptcy debtors. If you recently went through a Chapter 13 bankruptcy case and are working to meet the terms of your repayment plan, you may have begun experiencing difficulty as a result of COVID-19. You may have lost your job, which would make it impossible to meet your monthly payment obligations. Or you may have come down with the virus, resulting in lost work days and limited income. Under the CARES Act, if you are suffering hardship as a result of the pandemic, you may be able to have your Chapter 13 repayment plan modified.

Telephone 341 Meeting of Creditors
The 341 Meeting of Creditors is an essential part of a consumer bankruptcy case. One of the temporary changes to the bankruptcy system is that these meetings will not be held in person for the time being. Instead, they will be held over the telephone. You should speak with a bankruptcy lawyer to learn more about how this will work and what the implications might be.

Court Closures and Telephone Hearings
Courts across Illinois are closed except for emergency situations, and a wide variety of scheduled cases have been postponed. Depending upon where in Illinois you filed for bankruptcy, any planned hearings may be postponed, or they may be held over the phone instead of in person.

Contact an Oak Park Bankruptcy Lawyer or Assistance
If you have questions about filing for bankruptcy, one of our Oak Park bankruptcy lawyers can speak with you today. We know how difficult the present moment is for individuals and families, and we can discuss your options with you. Contact the Emerson Law Firm to learn more about how we can assist you.


See Related Blog Posts:

Coronavirus Pandemic Likely to Cause Consumer Bankruptcies

Can I File for Bankruptcy Again?

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