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Michael McLaughlin LLC

How Are My Funds Safe From Judgement?

After such a period of economic hardship for so many, the federal government has established the Coronavirus Aid Relief and Economic Security (CARES) Act to assist individuals experiencing financially tricky times. This has made a significant shift in how Chapter 13 bankruptcy is carried out and has a host of benefits for anyone who has confirmed their bankruptcy plan as of March 27, 2020. As a local Debt Relief Lawyer in Somerville, NJ, Michael McLaughlin has specialized expertise in assisting and educating clients on the new avenues available to them on the way to financial freedom.

Instead of the usual five-year debt relief plan, the CARES Act has the option to extend the payment plan by up to two years or a total of 84 months and uniquely protects your funds that may have previously been considered disposable income. Additionally, the additional unemployment bonus of $600 and the equivalent of the $1,200 stimulus checks are protected under the act. They will not be subject to the payment plan to which you previously agreed. Funds taken from retirement accounts and 401k’s also have unique protections and are more easily accessible than what they may have been in the past. To learn more about the vast array of benefits and protections granted by the CARES Act, contact a local CARES Act Attorney in Somerville, NJ, and discover the options that may have become available since you filed for Chapter 13 bankruptcy.

What Are The Pandemic Unemployment Benefits Under The Cares Act?

Since the current virus situation has led to many people being unable to continue employment or searching for it, the CARES Act has established benefits specifically designated to compensate for the financial hardship caused by this employment crisis. On top of the additional $600 added to each unemployment payment and the stimulus checks distributed to non-dependent adults over the age of 18, the act also protects this income from payment plans established as parts of bankruptcy judgments.

The CARES Act & Bankruptcy have joined to give people facing economic hardship the best possible chance at relief from debt and a path to a fresh start. Especially in areas heavily affected by the mass unemployment crisis, finding a CARES Act Attorney can make a significant difference in your Chapter 13 bankruptcy case and can allow for relief that was not before possible. In Somerville, NJ, Michael McLaughlin LLC is committed to assisting the community in enduring the current situation as best it can. From education to representation, our doors are always open.

The first step in learning how the CARES Act can assist you during your bankruptcy case is scheduling a free initial consultation to discuss the specifics of your circumstances so we can determine what path will be most beneficial to you. From filing an extension for your payment plan or learning what streams of income may no longer be considered disposable, it is in your best interest to get the support you need in a timely manner. Don’t wait. Call our office in Somerville, NJ, today to begin or continue your journey to financial freedom.

What Exactly Is The CARES Act And How Has It Affected Bankruptcy Practice?

In response to challenging and difficult economic times, U.S. Congress passed the Coronavirus Aid Relief and Economic Security (CARES) Act on March 27, 2020. The CARES Act provides a two trillion-dollar economic stimulus for U.S. industries and businesses who have been affected by the coronavirus pandemic.

One of the main provisions with regard to bankruptcy law is that if an individual has a confirmed Chapter 13 plan as of March 27, 2020, then they can seek to extend that plan beyond the limit of 60 months for another two years to an 84-month plan. A Debtor seeking the extension of their Plan must t show material financial hardship due to the coronavirus pandemic. To accomplish this, individuals will have to file a modified plan and seek confirmation of that plan. The provisions of the CARES Act that provided for an extended Chapter 13 Plan will sunset or expire within a year. After March 28, 2021, Debtors will no longer be eligible to have their 60-month Chapter 13 plan extended to an 84-month plan.

Another provision of the CARES Act deals with the calculation of disposable income for the purposes of confirming a Chapter 13 plan. This calculation does not include coronavirus-related payments of up to $1200.00 for individuals and more if there are dependents. Also, the federal stimulus of $600 per month additional unemployment payment is excluded from the means test.

The CARES Act also put into place the Small Business Reorganization Act (SBRA), which has been in effect since February of 2020. This law increased the debt limit for businesses that want to take advantage of subchapter “V” of the bankruptcy code. The debt limitation for businesses was increased from $2.7 million to $7.5 million, which will revert to the original amount in March of 2021.

Other provisions address retirement distributions. Individuals can take distributions from 401(k) plans, qualified retirement accounts, and IRAs up to $100,000 without having to pay the 10 percent penalty on early distributions. This is typically applicable for people who are under 59 and a half years old and can prove that the distribution is related to adverse financial consequences experienced as a result of factors related to COVID-19. In terms of the 401(k) loans, will have three years to pay back the taxes on those loans as opposed to only one year. Additionally, there is an interesting provision that allows for the avoidance of tax consequences if the money is repaid under the plan. Another significant provision is that for a period of six months (ending September 30, 2020), all federal government student loan payments are deferred.

The CARES Act has also implemented a foreclosure moratorium for federally-backed loans, which comprise about 60 percent of the loans involving commercial business. Individuals who have been affected by COVID-19 are able to seek 180-day forbearances on residential mortgage payments. Private lenders are not required to grant the forbearances, but many are receptive to requests for payment extensions.

For more information on CARES Act, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (908) 373-8500 today.

Michael McLaughlin, Esq.

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(908) 373-8500

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