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Bradley’s Bankruptcy Basics: COVID-19 Bankruptcy Relief Extension Act Extends Various CARES Act Amendments to the Bankruptcy Code

Last March, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) made several changes to the Bankruptcy Code, including those changes discussed in more detail here. As it became clear that we would be dealing with COVID-19 for much longer than previously anticipated, Congress passed the Consolidated Appropriations Act (CAA), which made additional changes to the Bankruptcy Code, including those explored in more detail in this article.

Originally, several of the Bankruptcy Code amendments included in the prior legislation were scheduled to sunset in March 2021, on the first anniversary of the CARES Act. However, on March 27, 2021, hours before the originally scheduled sunsets, the COVID-19 Bankruptcy Relief Extension Act of 2021 (Extension Act) was passed. While the Extension Act extended certain aspects of the Bankruptcy Code amendments included in the CARES Act, it did not extend any of the amendments in the CAA.

Below is a summary of various CARES Act and CAA amendments to the Bankruptcy Code and their respective sunset dates as modified by the Extension Act.

Set to Sunset on December 27, 2021

  • COVID stimulus payments do not constitute property of the bankruptcy estate.

    • CAA Section 1001(a)

    • Modifies Bankruptcy Code Section 541(b)(11)

  • Chapter 13 debtors who have missed three (3) or fewer mortgage payments due to COVID-19 or have entered into a loan forbearance or mortgage modification agreement can seek an early bankruptcy discharge.

    • CAA Section 1001(b)

    • Modifies Bankruptcy Code Section 1328(i)(1)

  • Debtors in bankruptcy or individuals who have received bankruptcy discharges cannot be denied relief under the CARES Act or denied a mortgage forbearance or protection under foreclosure and eviction moratoria.

    • CAA Section 1001(c)

    • Modifies Bankruptcy Code section 525(d)

  • Mortgage servicers can file a Supplemental Proof of Claim for forborne amounts pursuant to a CARES Act forbearance within 120 days of the expiration of the forbearance period.

    • CAA Section 1001(d)

    • Modifies Bankruptcy Code Sections 501(f) and 502(b)(9)

  • Any party in standing, including a mortgage servicer, can file a motion to modify a Chapter 13 plan to provide for payment for a CARES Act Supplemental Proof of Claim.

    • CAA Section 1001(e)

    • Modifies Bankruptcy Code Section 1329(e)

Set to Sunset on March 27, 2022

  • COVID-19-related income is not included when calculating a debtor’s “current monthly income.”

    • CARES Act Section 1113(b)(1)(A)

    • Modifies Bankruptcy Code Section 101(10A)(B)(ii)(V)

  • COVID-19-related income does not constitute a Chapter 13 debtor’s “disposable income.”

    • CARES Act Section 1113(b)(1)(B)

    • Modifies Bankruptcy Code Section 1325(b)(2)

  • A Chapter 13 debtor whose plan was confirmed prior to March 27, 2021, and who is experiencing a COVID-19-related hardship can move to modify his plan to allow for plan payments over a period of seven (7) years, rather than a period of three (3) or five (5) years.

    • CARES Act Section 1113(b)(1)(C)

    • Modifies Bankruptcy Code Section 1329(d)(1)


© 2023 Bradley Arant Boult Cummings LLPNational Law Review, Volume XI, Number 119

About this Author

Elizabeth Brusa Financial Attorney Bradley

Elizabeth Brusa is an associate in the Banking and Financial Services Practice Group who focuses on financial services litigation, bankruptcy compliance and litigation, judgment and arbitration award enforcement, and small dollar and unsecured lending. 

Elizabeth represents lenders, mortgage servicers, and other financial services businesses in state and federal court litigation, including defending against allegations of violations of various consumer protection statutes, wrongful foreclosures, and debt collection statutes. She further assists...

Christy Hancock Financial Services Lawyer Bradley

Christy Hancock’s practice is dedicated to financial services regulatory compliance and litigation. Her work with mortgage servicing and financial institution clients has given her a broad base of knowledge regarding laws affecting the mortgage servicing business, including bankruptcy and foreclosure best practices, payment application, correspondence requirements, allowable fees, loan modifications, escrow requirements, and property preservation. In recent years, the majority of her practice has focused on advising large financial institutions on bankruptcy-related...

Alex Dugan Bradley Lawyer Mortgage Servicing

Alex Dugan regularly represents financial services and mortgage company clients with compliance matters, including risk management and remediation, state investigations, regulatory compliance, and operational implementation of legal guidelines. Alex’s practice focuses on the bankruptcy compliance and regulatory concerns that her clients face. She is also a member of the firm's Auto Finance and Payment Systems industry teams.

With this experience and perspective, Alex provides daily guidance to clients on bankruptcy-related regulatory and compliance matters, supervises large-scale...