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. The law provides that cases MUST complete within the statutory time limitations (60 months maximum). In most cases, we propose the lowest possible payment at the outset to ensure your likelihood of maintaining the payments. When that happens, that leaves little room for waivers or reductions.  In some cases, waivers or reductions are simply not possible no matter the circumstances.  However, I will be happy to request an accommodation and determine from the trustee if such an accommodation is possible.

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.  To that end, I must know the following information before I can submit the request to the trustee: date of the first paycheck that will be impacted, extent to which it will be affected (i.e. number of hours cut, etc.), whether you’ll receive alternate compensation (such as temporary unemployment benefits), estimate of how long furlough will last (if known), and month of the plan payment that will be affected.  

If you have been impacted and have the information indicated above that’s necessary for requesting a review, please provide it to me as quickly as possible so that I may put your request in for review.  Please understand that the trustee will likely not consider requests during this period without this information.

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.  I assure you I will make any necessary request quickly and communicate with you as soon as information is available following the request.  I will help you as much as I possibly can.  In cases where waivers are not available, there may be alternate options, such as refiling a case if it is dismissed for nonpayment, and I can discuss those options with you as well.  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 I have recently been advised that the Governor has amended the policy on unemployment temporarily to help people during this time as well.  It is my understanding that there is no longer a one week waiting period for benefits, that there is not a requirement to look for another job during the period of unemployment related to COVID-19, and that all employees that lose their jobs or have hours reduced due to COVID-19 issues may apply for unemployment benefits.  You can also apply remotely rather than applying in person.  You can apply by phone or online at www.des.nc.gov.  It is my hope that, should you be displaced due to these issues, perhaps you would be able to receive unemployment benefits, even if for only a brief layoff/furlough period, so that it will offer you some relief during that time as well.  You may create an account and apply for unemployment benefits with the Employment Security Division at https://des.nc.gov/apply-unemployment.” I do 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.