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COVID-19 Bankruptcy Relief Extension Act Signed Into Law

Washington, D.C. - On Saturday, President Joe Biden signed into law H.R. 1651, the COVID-19 Bankruptcy Relief Extension Act of 2021, bipartisan legislation introduced by House Judiciary Committee Chairman Jerrold Nadler (D-NY) and Congressman Ben Cline (R-VA) that extends the temporary bankruptcy relief provisions granted by the CARES Act for an additional year. The bill, which originally passed the House of Representatives by a bipartisan vote of  399-14 on March 17, was amended and passed by the Senate on March 24 and passed again in the House by unanimous consent on March 26. 

"I am proud that President Biden signed into law our legislation, the COVID-19 Bankruptcy Relief Extension Act, which extends vital COVID-19 bankruptcy relief provisions for an additional year," said Chairman Nadler. "This urgently needed bill ensures that families and small businesses do not lose access to these economic lifelines, keeping more families in their homes and allowing more small businesses to thrive. Extending these necessary protections until March of next year will also provide much-needed certainty that the bankruptcy system will remain responsive to debtors and creditors alike during this extraordinarily disruptive crisis. I thank Congressman Cline, as well as Chairman Durbin and Ranking Member Grassley, for their partnership on this vital, bipartisan legislation."

"The Small Business Reorganization Act has served as a lifeline for struggling businesses throughout the COVID-19 pandemic," said Congressman Cline. "Since its inception, 80 percent of small business debtors have chosen to proceed under the provisions of this bill meaning more entrepreneurs have been able to keep their doors open and employees on payroll during these uncertain times. By extending the debt threshold for eligibility, significantly more businesses can take advantage of this bill. I appreciate Chairman Nadler’s partnership in getting this legislation to the President’s desk."

As amended by the Senate, the COVID-19 Bankruptcy Relief Extension Act of 2021 extends the bankruptcy relief provisions enacted in the CARES Act of 2020 bill until March 27, 2022. These provisions do the following:

  • Allow more small businesses to file for streamlined Chapter 11 bankruptcy proceedings under the 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.
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