Impact of COVID-19 on Plan Payments

TO: CHAPTER 13 CLIENTS
FROM: KRISTEN S. NARDONE
RE: Impact of COVID-19 on plan payments

Presently there is no provision for a blanket waiver of chapter 13 plan payments due to the outbreak of the coronavirus. The Trustees’ offices have been inundated with inquiries, as has our office, and the unfortunate news is that payments are still due as usual. Unfortunately- outside of some drastic measure that I do not foresee taking place- there is no provision possible for the automatic excusal of payments. However, if your income is impacted, we can request- on a case by case basis- waivers or reductions for the month in which your payment will be short. Please know this may not be a possibility in every case as certain cases do not have room to accommodate waivers or reductions. In some cases, one-time waivers or a one-month reduction in the amount of your payment may be possible only if the payment is increased in subsequent months to make up for the difference.

UPDATE – the CARE Act enacted on 3/27/30 amended the Bankruptcy Code for a period of one year that allows ch. 13 plans that were already CONFIRMED as of 3/27/20, i.e., the Confirmation Order was entered in your case, to be extended up to a maximum of 7 years. Under the former Code provision, the maximum was 5 years. What this means is that if you are negatively impacted financially by the COVID19 pandemic, your plan period may be able to be extended for an additional 2 years. This could result in a lower plan payment and/or the ability to catch up any plan arrearage by spreading it out over an additional period of time. If you wish to discuss this option, please call the office at 704-784-9440.

Due to the large number of requests that will be coming in from debtors throughout the district in the upcoming weeks, this situation will place a strain on the trustees’ offices and delays in responses are to be expected. And as such, requests MUST be limited to cases directly and certainly impacted by this situation. Many employers are paying staff during the quarantine period. In these cases, a request for review would not be appropriate. Many employers are referencing furloughs as a possibility, but not yet a certainty. We must limit requests to cases in which it is a determined certainty and not just a possibility, and we must be able to provide documentation should the trustee request it to support the immediate need. Unemployment benefits are being extended and include an additional $600.00 per week on top of the North Carolina unemployment benefit amount. If you are not negatively impacted financially, continue to timely make your regular plan payments.

Again, please note that a reduction or waiver is not a certainty. While I’m sure trustees will be sympathetic and as accommodating as possible given the circumstances, the fact remains that plan terms are court orders and all parties must comply with the terms, and the trustee is obligated to make disbursements to creditors from your payments pursuant to the plan terms. If you are struggling, there may be alternate options, such as extending the Plan length or refiling a case if it is dismissed for nonpayment. It is likely that many if not most of you would be eligible to refile should your case be dismissed during this period (and perhaps have a lower payment upon refiling). While it may not be an ideal solution, it may be very helpful for you outside any other alternative.

Please note that who may receive unemployment benefits has been greatly extended under the CARE Act and for what duration. You may create an account and apply for unemployment benefits with the Employment Security Division at https://des.nc.gov/apply-unemployment.

I anticipate that the Trustee and Court will offer some leniency during this trying period, but no one can predict what that may be at this time.

Message from the Chapter 13 Trustee:
The Chapter 13 office is closed to the public and debtors cannot bring payments to that office. All payments must be mailed to the Chapter 13 office. We realize those payments may not be received in the month in which they are due. If the payment is post marked within the month the payment is due or within the first three days of the following month, the Chapter 13 office will accept it as a timely payment. We also are aware it will be difficult for some people to get certified checks, cashier’s checks or money orders. Therefore, the Chapter 13 office will accept personal checks throughout the month. If the personal check is received after the 15th, they will put a temporary hold on the check, so they will not disburse payments to creditors with that disbursement cycle. For example, if the Chapter 13 office receives a personal check on March 26th, they will hold it until the April 30th disbursement cycle.