Will I Lose My COVID-19 Stimulus Check in Chapter 7 Bankruptcy?

TL;DR

The video discusses concerns regarding whether the $1,200 and $2,400 stimulus payments provided under the CARES Act can be seized by a bankruptcy trustee in a chapter 7 bankruptcy.

Transcript

• Hey everybody. This is John Skiba from the Arizona Consumer Law Group. And in today's video I wanted to discuss some information that we recently received about how the stimulus payments under the CARES Act of 2020, the $1,200, $2,400 payments that are going to be provided to families, how those are going to be treated a chapter 7 bankruptcy? Now... Read More

Key Insights

• ❓ Concerns arose among bankruptcy attorneys regarding the potential seizure of CARES Act stimulus payments in chapter 7 bankruptcy.
• 🥡 Chapter 7 bankruptcy aims to eliminate various types of debt, but non-exempt assets can be taken by a bankruptcy trustee to pay off creditors.
• 🇺🇸 The United States trustee expects that bankruptcy trustees are highly unlikely to pursue the seizure of stimulus payments.
• 🇺🇸 The order from the United States trustee directs local trustees to notify their superiors before taking any action to recover the stimulus payments.
• 😒 It is believed that bankruptcy trustees will allow families to use the stimulus payments for their intended purpose of covering basic needs.
• 🧑‍🤝‍🧑 The stimulus payments provided by the CARES Act are $1,200 for individuals and $2,400 for married couples.
• 🥇 Income limits are in place to determine who is eligible to receive the stimulus payments.

Questions & Answers

Q: Can a bankruptcy trustee seize the CARES Act stimulus payments in a chapter 7 bankruptcy?

While there was initial concern, the United States trustee has stated that it is highly unlikely for bankruptcy trustees to seize these funds.

Q: What types of debts can be eliminated in a chapter 7 bankruptcy?

Most unsecured debts, such as credit cards and medical bills, can be completely eliminated in a chapter 7 bankruptcy.

Q: Are there income limits to receive the stimulus payments under the CARES Act?

Yes, there are income limits to determine eligibility for the stimulus payments provided by the CARES Act.

Q: What are some potential uses of the stimulus payments for families?

The stimulus payments can be used to cover basic necessities such as groceries, rent, and car payments during this difficult time.

Summary & Key Takeaways

• The video expresses concerns about the lack of specific language in the CARES Act about whether stimulus payments can be seized in a chapter 7 bankruptcy.

• Chapter 7 bankruptcy aims to eliminate many types of debt, but a bankruptcy trustee can take non-exempt assets to pay off creditors.

• The United States trustee states that it is highly unlikely that trustees will seize these stimulus payments.