President Biden’s $1.9 trillion COVID relief bill will extend Federal unemployment benefits until at least September 6, 2021. This will continue to act as a $300.00 per week top-up on state unemployment benefits. This is important for bankruptcy purposes for a couple reasons.
First, this additional $300.00 can be used to meet current obligations in Chapter 13 bankruptcy. This has helped many people maintain there payments, or keep their mortgage current. But for this payment, many Americans would not have been able to keep secured payment obligations such as cars and homes. Not only has it been important for people in bankruptcy, it has been important keeping people OUT of bankruptcy.
The second issue is more problematic, however, for people in the process of filing bankruptcy. The $300.00 a week in addition to state unemployment occasionally provides them with too much income to file. This is especially true of the income and expense analysis in Schedules I & J of the bankruptcy forms. (NOTE: It will not push you above the “means test” threshold if your income is being calculated with a spouse who is still working).
One solution is to wait. The benefits are scheduled to end in September. At that point, they may be renewed, reduced, or eliminated. Chapter 13 could also be an option. However, it is not a great option, as it costs more, and with the benefits likely to end in September, it may not even be feasible.
Federal stimulus benefits are an important part of the American financial recovery. Call us at 412-414-9366 to see if they will affect your ability to file bankruptcy.