[CLBS] Fwd: NACBA Announcement - HEROES Act Bankruptcy Provisions

[Paul Ross]

Here are an outline of some of the bankruptcy provisions in the HEROES
Act.


NACBA’s Legislative Committee and Board of Directors proudly share our
association’s bankruptcy provisions included in H.R. 6800. (*Click here to
read the bill text
<https://www.congress.gov/116/bills/hr6800/BILLS-116hr6800ih.pdf>,*
bankruptcy protections begin on page 993).


   1. *Protecting Homes and COVID Benefits. *The House bill included a
   $100,000 homestead exemption floor, applicable to all cases where the
   homestead exemption would otherwise be lower, and a provision excluding
   COVID benefits from property of the bankruptcy estate. Many debtors will be
   filing bankruptcy cases solely because of the pandemic and its effects.
   They should not lose their homes just because these circumstances caused
   financial disaster. And debtors should also be protected from trustees
   seizing COVID benefits that are often essential to continued subsistence.
   2. *Protection from Discrimination Against Bankruptcy Debtors. *In the
   initial days of attempting to obtain benefits afforded by the CARES Act,
   bankruptcy debtors were being told that they cannot receive the benefits
   such as mortgage relief and small business loans because they are in
   bankruptcy. Bankruptcy Code section 525 is amended to make clear that no
   entity can discriminate against past or current bankruptcy debtors in
   providing COVID-related mortgage assistance.
   3. *Ensuring Chapter 13 is Available to Families that Need It. *The debt
   limits in Chapter 13 have not kept up with increasing home mortgage and
   student loan debt. Chapter 13 can also provide a method of reorganization
   from many small businesses that is much less expensive than chapter 11. The
   chapter 13 debt limits are doubled by the bill, which would allow more
   families and small businesses to file chapter 13 cases to resolve the
   hardships caused by this crisis.
   4. *Ensuring a Fresh Start for Chapter 13 Debtors Who Become Unable to
   Make Plan Payments. *Debtors currently in chapter 13 will lose jobs and
   income or have large medical expenses, making continued payments
   impossible. They now have the option to obtain a chapter 13 discharge
   without completing payments if they have been in chapter 13 for at least
   one year.
   5. *Allowing an Extended Period for Chapter 13 Debtors to Catch Up on
   Missed Mortgage Payments.* Debtors currently must complete their chapter
   13 plans within a five-year period. They are now allowed to extend their
   chapter 13 plans for up to an additional 2 years, not to exceed 7 years,
   solely to allow them to catch up on missed mortgage payments or on mortgage
   payments which had been subject to forbearances.

While not all offered provisions were incorporated into the current bill,
NACBA is strongly continuing our efforts towards getting them into the
final House and Senate compromise bill. One provision NACBA continues to
push for is:


   1. *Giving Chapter 13 Debtors Options to Deal with Mortgage Payments
   When There Has Been Forbearance on Those Payments*. This provision
   permits mortgage servicers to file a supplemental claim when there has been
   forbearance on mortgage payments during a chapter 13 plan. The debtor can
   request that the court modify the plan or order that the mortgage payments
   be deferred until then end of the mortgage period. The court can also order
   mediation to allow the debtor and mortgage servicer to work out a mutually
   satisfactory arrangement to deal with the payments.



-- 
Idaho Bankruptcy Law
T: (208) 219-7997
F: (208) 416-6996

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