COVID and Bankruptcy -- Pandemic Debt Relief Options

Bankruptcy Options for Pandemic Debt

If COVID caused job loss, business closure, or medical debt that you are still dealing with, bankruptcy may provide relief:

• Stimulus payments: Federal stimulus payments received are NOT counted as income for the bankruptcy means test. They also do not need to be turned over to the trustee.
• PPP and EIDL: PPP loans that were forgiven are not income for means test purposes. Unforgiven PPP and EIDL loans may be dischargeable if the business has closed.
• Forbearance aftermath: If you entered mortgage or student loan forbearance during COVID, the deferred payments may have created a large arrears. Chapter 13 can cure mortgage arrears over 3-5 years.
• Medical debt: COVID-related medical bills are fully dischargeable in bankruptcy.