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Coronavirus Economic Crisis: CARES Act makes Chapter 7 Bankruptcy Easier

On Behalf of | Apr 7, 2020 | Bankruptcy, Chapter 7 | 0 comments

The Coronavirus Aid Relief and Economic Security Act, (Cares Act) dealing with the impact of COVID-19 has made it easier to qualify for Chapter 7 Bankruptcy, to eliminate credit card and other unsecured debt.

Since 2005, an individual cannot qualify for Chapter 7, if household income (husband and wife) is greater than the median income of a family of the same size in your state. For this purpose, “income” is measured by taking the gross income (before deductions) for six months prior to bankruptcy filing, and then doubling that amount.

Many middle-class families cannot normally qualify because of this income ceiling. In New York, the 2020 figures are:

Household Size Median Income
1 $57,137
2 $72,642
3 $88,240
4 $102,384
5 $116,550






Under the CARES Act, employers can apply for loans to maintain payroll for employees.

The Act also provides for a $600 weekly supplement to Unemployment Insurance entitled “Federal Pandemic Unemployment Compensation”

This law has special bankruptcy-related provisions. One of the most important provisions states that any funds an individual receives under this Act are NOT TO BE COUNTED to determine Chapter 7 eligibility! 

Thus, an individual who normally would not be eligible to file Chapter 7, may now be eligible!

If you live in NYC and would like a free telephone or video consultation with  Board Certified Bankruptcy Attorney Paul Hollender to determine your options, please call at our office.