Pay Secured and Priority Creditors:
In order for many Chapter 13 Bankruptcy Plans to be successful, individuals must pay off their tax debt (priority creditor) or mortgage arrears (secured creditor) during the plan commitment period.
If an individual’s income has decreased then paying off mortgage arrears or priority creditors may not be possible. If the decreased income was a result of Covid-19, then the Chapter 13 Plan may be extended 24 months. The additional payments could allow enough income over the course of the extended plan to pay off the secured and priority debts.
Procedure for utilizing the provisions for the CARES Act:
The bankruptcy filer must file a motion with the court to Modify their Chapter 13 Plan to utilize the options to extend their plan to either abate, or pay off their priority and secured creditors. At the time of this article, the court must approve the modification by March 27, 2021. (Now Extended to March 27, 2022 - H.R. 1651).