Virus Relief Should Be Excluded From Bankruptcy, DOJ Says

Coronavirus relief payments and expanded child tax credits under the latest relief law should not be considered when determining the disposable income of a person in bankruptcy, according to a notice released on the U.S. Department of Justice's website.

The payments and child tax credits under the American Rescue Plan Act , signed by President Joe Biden on March 11, should not be considered when calculating disposable income under Chapter 13 bankruptcy repayment plans, according to the notice dated Thursday. Chapter 7 and Chapter 13 bankruptcy trustees also shouldn't consider the aid when administering estate assets, the notice said. 

The Consolidated Appropriations Act  excluded recovery rebates from bankruptcy estate property, and that provision seems to apply to all three rounds of the coronavirus relief payments authorized since the pandemic started, according to the notice. The American Rescue Plan Act provided for $1,400 payments for individuals and $2,800 for couples, with additional funds for qualifying dependents and phaseouts at higher income levels. 

--Editing by Neil Cohen.

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