When Congress passed the CARES Act last year, it included changes to the Bankruptcy Code that helped individuals and businesses. Many of these provisions expire on March 27, 2021 even though the economy has not yet returned to normal. The COVID-19 Bankruptcy Relief Extension Act of 2021, which has not passed yet, would extend the changes for another year. The proposed law also seeks to extend other COVID-19 bankruptcy relief provisions that were enacted through the Consolidated Appropriations Act of 2021 and would otherwise expire in December 2021. If this law is passed as currently written, the relief will include:

  • An increase in the maximum debt threshold for a small business debtor to qualify under Subchapter V;
  • An amendment to the definition of “income” for Chapters 7 and 13 that excludes COVID-19 related payments from the federal government;
  • An amendment permitting debtors in Chapter 13 to modify a plan of reorganization if the debtor is experiencing a material financial hardship due to the COVID pandemic;
  • A provision that prevents termination of utility services in bankruptcy for individuals who make a payment to the utility for service provided during the 20 days prior to the bankruptcy filing, and after the 20-day period, pay for services provided during the case when those payments becomes due.

More information about this proposed bill may be found in this press release from U.S. Senate Democratic Whip Dick Durbin, who introduced this bipartisan legislation.