Congress’s federal aid package aimed at weakening the coronavirus pandemic’s economic sting has several features to help financially struggling individuals who turn to bankruptcy for relief, including a guarantee they won’t have to give up stimulus checks to pay off overdue bills, the Wall Street Journal reported. Most of the provisions in the stimulus bill brokered by Senate leaders this week are designed to prevent Americans from filing for bankruptcy protection. But the legislation, which was approved by the Senate on Wednesday and will be considered by the House today, also contains measures to protect struggling people and small businesses that do. One provision prevents people who file for bankruptcy protection from needing to turn over any federal money they receive from the stimulus package to cover past debts. The bankruptcy process requires borrowers to either turn over valuable possessions or pledge to repay a portion of their debt for several years before they can cancel the debt that remains.Nonpublic businesses with less than $7.5 million in debt can use the expedited process under the Senate legislation, up from the current threshold of about $2.8 million in debt. More than half of businesses that filed for chapter 11 protection between 2013 and 2017 had debt below $7.5 million and would benefit from the changes, according to University of Illinois Law Prof. Robert Lawless. Read more. (Subscription required.)
Click here to read ABI’s press release on the CARES Act.
