Let’s be frank. If you have more than $10,000 unsecured debt, it may be better to use any stimulus monies to discharge all of your unsecured debt by filing a chapter 7 bankruptcy, rather than simply put it toward the interest that continues to accrue.
If this is your best option, there is good news. The new stimulus bill provides that this money will not be considered property of the bankruptcy, nor will it count against your income.
The most recent stimulus payments under the new stimulus bill (Consolidated Appropriation Act) are not property of the estate under temporary Code § 541(b)(11) enacted under the CCA. They are also excluded from CMI under the original CARES Act, at least until March 27, 2021. After March 27, until Dec. 27, 2021 when the CCA provisions sunset, you might argue that they are not disposable income under a separate amendment to the Internal Revenue Code enacted under the CCA (adds new 26 U.S.C. § 6428A) by providing that “no applicable payment shall be subject to, execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.”
However, if you owe less than $10k, there are likely better options out there for you. Discuss with us – we can help avoid garnishment, eviction, foreclosure etc.
Also, when looking for a bankruptcy attorney, why not look for one who can address your student loans at the same time?! See our Student Loan Resources page for options and what we can do! We have several videos, podcasts, a free webinar and e-book “How to Take Your Life Back From Your Student Loans” on our website. Check out our reviews — they say it all, and better than we ever could!