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Bankruptcy Code Changes in the CARES Act

March 31, 2020

By: Michael Provenzale

The recently passed CARES Act provides various types of relief as a result of the coronavirus pandemic. One source of that relief comes in the form of temporary changes to the bankruptcy code, which, for the next year, may provide some relief to individual and small business debtors.

Here are the highlights of those changes: 

  • Allowing more small businesses to qualify to file for bankruptcy protection under the more streamlined and less costly new subchapter V of Chapter 11 by temporarily increasing the maximum amount of debt permitted from $2,725,625 to $7,500,000.

  • Excluding coronavirus-related payments received from the federal government from being treated as “income” for purposes of qualifying to file cases under Chapters 7 and 13 and from being treated as “disposable income” for the purpose of calculating Chapter 13 plan payments.

  • Permitting, with court approval, modifications to existing Chapter 13 plans based upon hardships resulting from the coronavirus. 
For up-to-date news please follow our Coronavirus (COVID-19) Response Team page. 

This article is informational only. You should consult an attorney before acting or failing to act. The law may change rapidly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ALL ARTICLES ARE PROVIDED AS IS AND WITH ALL FAULTS. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.

Mike Provenzale is a shareholder in the Creditors’ Rights Group, representing institutional and private lenders in commercial loan foreclosure and other collection lawsuits, receiverships, workouts, bankruptcies, and REO dispositions throughout the state. His litigation practice also includes business, real estate, and condominium litigation.

Additionally, Mike has experience in the area of Real Estate Transactions, Development and Finance, where he has represented a myriad of private and public clients in connection with the leasing, financing, acquisition, and disposition of commercial real estate, and has published several articles on current creditors’ rights and real estate issues.

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