WASHINGTON – –
Amid the ongoing COVID-19 pandemic, U.S. Senate Democratic Whip Dick Durbin
(D-IL), Chair of the Senate Judiciary Committee, and U.S. Senator Chuck
Grassley (R-IA), Ranking Member of the Senate Judiciary Committee, today
introduced the COVID-19 Bankruptcy Relief Extension Act, bipartisan
legislation to temporarily extend COVID-19 bankruptcy relief provisions enacted
as part of the March 2020 CARES Act and December 2020 omnibus
appropriations bill.
“As
businesses and individuals continue to struggle with the economic challenges of
the ongoing pandemic, Congress is committed to providing the tools and
flexibility for them to once again be successful. Last year, we passed
temporary bankruptcy relief provisions to help those facing bankruptcy during
the pandemic. This included increasing limits in my 2019 bill to streamline
bankruptcy laws for small businesses. This bill extends that relief for an
additional year,” Grassley said.
“Extending these temporary bankruptcy provisions
until March 2022 will provide critical relief to families and small businesses
facing hardships due to the ongoing COVID-19 pandemic,” Durbin said.
The
bill would extend for an additional year CARES Act bankruptcy provisions
that are set to expire on March 27, 2021. These provisions do the following:
·
Allow more small businesses to file for
streamlined Chapter 11 bankruptcy proceedings under Grassley’s
Small
Business Reorganization Act of 2019 by increasing the maximum debt limit
for those procedures from $2.7m to $7.5m.
·
Amend the definition of income for Chapters 7
and 13 (which govern individual bankruptcy filings) to exclude federal
COVID-related relief payments from being treated as “income” for purposes of
filing bankruptcy.
·
Clarify that the calculation of disposable
income for purposes of confirming a Chapter 13 plan does not include
COVID-related relief payments.
·
Permit individuals and families in Chapter 13
to seek payment plan modifications for plans confirmed before the date of
enactment of this extender bill if they are experiencing a material financial
hardship due to the coronavirus pandemic.
In
addition, the bill would extend until March 27, 2022, several additional COVID
bankruptcy relief provisions that were included in the December omnibus/COVID
relief package and that are set to expire in December 2021. These provisions do
the following:
·
Provide that federal COVID relief payments to
individuals are exempt from being treated as property of the estate in
bankruptcy proceedings.
·
Ensure that families in Chapter 13 bankruptcy
plans who have made all plan payments but have missed 3 or fewer mortgage
payments because of the pandemic are not denied a discharge for their other
debts (though the mortgage payments would continue to be owed).
·
Ensure that families that are or were in
bankruptcy proceedings are not ineligible from CARES Act mortgage
forbearance and eviction moratorium provisions.
·
Set forth a process for creditors to file a
proof of claim for payments deferred during forbearance periods granted under
the CARES Act, and to permit modification of a chapter 13 plan to
account for such proofs of claim.
·
Prevent the termination of utility services in
bankruptcy by ensuring that individuals and families will not be required to
furnish a security deposit to maintain utility services during bankruptcy.
·
Exempt customs brokers who collect and pay
duties to Customs and Border Patrol on behalf of importers from the claw back
provisions of the bankruptcy code when an importer files bankruptcy.
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