Covid-19 and the 7 Year Plan

By Ken Siomos, Staff Attorney for Marsha L. Combs-Skinner (Newman, IL)

A small part of the recently passed “Cares Act” is the ability of Chapter 13 debtors experiencing a “material financial hardship” as a result of the covid-19 pandemic to modify their plan to 84 months.i Many Chapter 13 Trustee’s are likely anticipating a series of Chapter 13 Plan defaults and requests for moratoriums on Chapter 13 payments; the extension of plans by up to 24 months (or 48 months for those who confirmed a 36 month Plan) will certainly help debtors who are required to make up this period of non-payment to the Chapter 13 Trustee, especially if they are also going to be catching up on their direct-pay mortgage/rent and/or car payments missed during this period of suddenly record-high unemployment. For all of the criticism of Congress for its neglect in drafting clear bankruptcy legislation, I do applaud them for even considering the implications of covid-19 for bankruptcy debtors.

However, there is a material and arbitrary limitation within the Cares Act – the Plan must be confirmed, “prior to the date of enactment of this subsection.”ii Moreover, the Act does not modify 1322 or 1325 to allow a debtor to confirm an 84 month Plan, even if suffering a “material economic hardship” from covid-19. In short, a debtor suffering covid-19 related hardship who confirms their plan the day prior to the enactment date of the “Cares Act” could immediately modify their 60 month Plan to extend it by 24 months, decreasing their payment by an average of 29%,iii while a similar debtor whose plan is not confirmed prior to the effective date of the Act is unable to access those additional 24 months either by confirming a longer plan or modifying their plan after confirmation.

Congress certainly had to act quickly with respect to covid-19 and I certainly appreciate that the bankruptcy implications on current monthly income, projected disposable income, and plan length were considered at all; however, as quickly as reasonably practicable, technical corrections to Section 1113 should be made such that debtors suffering “material financial hardship” are a result of covid-19, who are unable to confirm prior to the date of enactment, have the same opportunity to extend the length of their Plan as debtors who are only differentiated by the date of their confirmation order.


[i] Section 1113(d)(1)

[ii] Id.

[iii] Assuming even monthly payments and a 60 month Plan, an extension of 24 months is a 40% increase in length but 24 out of 84 months is 28.57% and therefore a hypothetical $100 x 60 Plan could be changed to a $71.43 x 84 Plan, a 29% decrease in payment to reach a $6,000.00 “base.”


Ken Siomos Photo Ken Siomos has been the Staff Attorney for Marsha L. Combs-Skinner, Standing Chapter 13 Trustee, in the Central District of Illinois, since July 2018. He was previously Staff Attorney for John H. Germeraad, the Standing Chapter 13 Trustee for the Springfield Division of the Central District of Illinois, until the Trustee’s retirement at the end of June 2018. Siomos graduated magna cum laude from the University of Illinois at Urbana Champaign College of Law. He previously attended North Central College and graduated cum laude with degrees in economics and finance.

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