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Cares Act

A Record Low in Bankruptcy Filings

Despite the economic uncertainty brought by the pandemic this year, paradoxically, the number of bankruptcy filings in the country hit a new 14-year record low this November. According to data released by the legal giant, Epiq, new bankruptcy filings across all chapters for the month was 34,440, the lowest since January 2006.

According to Deirdre O’Conner, Epiq’s managing director of corporate restructuring, the economic uncertainty itself is to blame for the unusually low filing count.

“These historic low bankruptcy filings reflect the overall uncertainty about our economic recovery. Bankruptcy is a legal tool to restructure, but in this unknown financial environment, the benefit from seeking bankruptcy protection is unclear for individuals, families, and even large companies,” – Deirdre O’Conner.

In addition, government intervention may have also partly contributed to the fall in bankruptcy filings. The various COVID-19 related government programs and state eviction moratoriums are lessening individual incentives for filing for bankruptcy.

Individual bankruptcy filings through the year as a whole have been low. Compared to 2019 for the same period, in 2020, non-commercial filings under Chapter 7 were down 21%, from 414,625 to 325,716, and in the case of non-commercial filings under Chapter 13, the tally was down by 45%, from 252,660 to 137,764.

Source: Globe Newswire

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CARES Act and Chapter 13 Bankruptcy

In March of this year, in response to the impending economic downturn, the US government passed the CARES Act. Beyond the massive $2 trillion dollar stimulus package, the Act has allowed for a number of different changes to existing laws to make it easier for both businesses and individuals impacted by the COVID-19 pandemic to whether the crisis.

Among these includes changes made to the Chapter 13 Bankruptcy Law. Where the previous maximum repayment plan duration was set to 5 years, struggling debtors can now have it extended by a further 2 years. In addition, any COVId-19 related federal emergency relief payments will not be taken into account by the bankruptcy court in calculating your current monthly income.

These changes apply to all bankruptcy cases filed after the Act was enacted and is likely to remain applicable for some time.

Have any further questions regarding the CARES Act or bankruptcy? Schedule your free consultation with our legal experts by calling 512-640 3340.

Alternatively, you can book one online by visiting our website:

Link: https://seanflynnlaw.com/calendar/

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