At worst, the ideas themselves are harmful – a recent report from one province in Iran found that more people had died from drinking industrial-strength alcohol, based on a false claim that it could protect you from Covid-19, than from the virus itself. But even seemingly innocuous ideas could lure you and others into a false sense of security, discouraging you from adhering to government guidelines, and eroding trust in health officials and organizations.
There’s evidence these ideas are sticking. One poll by YouGov and the Economist in March 2020 found 13% of Americans believed the Covid-19 crisis was a hoax, for example, while a whopping 49% believed the epidemic might be man-made. And while you might hope that greater brainpower or education would help us to tell fact from fiction, it is easy to find examples of many educated people falling for this false information.
BANKRUPTCY and COVID -19
How Did the CARES Act Change the Bankruptcy Code?
Section 1103 of the CARES Act makes three amendments to the Code:
Excludes payments from COVID-19 payments under the CARES Act from current monthly income:
Section 101(10A) – the definition of “current monthly income”
Section 1325 – current monthly income that counts toward disposable income that must be devoted toward a chapter 13 plan
since the COVID-19 payments were excluded in 101(10A) it seems duplicative to include it here, but….
Section 1329 – new ground for plan modification if change related to COVID-19
new subsection B – can modify if debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to COVID-19.
Allow period can be a 7 year plan.
Same for a plan modification Section 1322 (a)(b) and (C)
but only applies to cases CONFIRMED before the date of enactment 3/27/20.
All provisions sunset in one year and are to be removed from the BK Code at one year.
Raised debt limit to $7.5 million for new sub-chapter 5 of chapter 11 – Small Business Bankruptcies
Stimulus Payments – even though excluded from CMI the funds are still property of the estate. The treatment is as a refundable tax credit.
Applies to cases filed before or after enactment. ??? REALLY – BEFORE???
Student Loans:fed student loan payment and interest suspended until 9/30/20
For any loan forgiveness loan repayment – the time period of the suspension shall count toward the required period
Credit reporting suspended
6 notices of collection restart
Mortgages in wake of COVID-19 -applied only to federal loans
forbearances: spell out the terms in any agreement
borrower can get up to a 180 day forbearance, then request and obtain additional forbearance for up t another 180 days.
during the forbearance no fees, penalties or interest shall accrue beyond the amounts contractually due
The covered period is during the emergency or until 12/31/20
all due at end of forbearance
the servicer/lender must pay impounds, and somehow those payments must be made up.
servicer has contractual obligation to make the PI to lender, or has to file MFR
Paycheck Protection Program – probably only go through your own bank.
The Act was passed by Congress on April 23, 2020 and is expected to be signed by President Trump. The Act builds on the CARES Act passed in March and appropriates $484 billion in additional funding for small businesses and hospitals under the CARES Act programs. The Act appropriates an additional funding for the very popular Paycheck Protection Program (PPP) loans. No substantive changes were made in the Act to the PPP loan program; it simply provides more dollars to permit additional loans to be issued to small businesses who were shut out during the first round of lending.
The Act provides the following funding:
$310 billion to replenish the Paycheck Protection Program, with $60 billion reserved for community-based lenders, small- and medium-sized banks and credit unions.
$50 billion for the Small Business Administration’s disaster loans, including strong protections to ensure Arizona’s farmers have access to this vital assistance.
$75 billion for hospitals and health care workers. House Democrats fought to include $75 billion to provide resources to health care workers on the frontlines, including Personal Protective Equipment.
$25 billion to ramp up testing. Testing is the key to reopening Arizona’s economy. Our national strategic testing policy will focus on increasing capacity.
This builds on the three previous coronavirus aid packages, including the $2.2 trillion CARES Act in March.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act
Passed by Congress and signed into law on March 27th, 2020. This over $2 trillion economic relief package intended to provide fast and direct economic assistance for American workers, families, and small businesses, and preserve jobs during this unprecedented freeze on the American life.
The bill is focused on keeping people spending money which keeps our economy going. That means direct cash for many, plus expanded unemployment benefits and new rules for things like filing your taxes and making retirement contributions.
Estimated to total $300 billion. Most individuals earning less than $75,000 can expect a one-time cash payment of $1,200. Married couples would each receive a check and families would get $500 per child. For instance, a family of four, earning less than $150,000, can expect $3,400.
The payments are based on either your 2018 or 2019 tax filings. People who receive Social Security benefits but don’t file tax return are still eligible, too. They don’t need to file taxes; their checks will be based on information provided by the Social Security Administration.
Extra unemployment payments:
Estimated to total $260 billion, but is subject to change depending on how many file for unemployment.
This bill adds $600 per week from the federal government in addition to the amount the worker receives from the state. That boosted payment will last for four months. States will continue to pay unemployment to people who qualify. That amount varies state by state, as does the length of time people are allowed to claim it.
The legislation also adds 13 weeks of unemployment insurance. People nearing the maximum number of weeks allowed by their state would get an extension. New filers would also be allowed to collect the benefits for the longer period.
Employers can provide up to $5,250 in tax-free student loan repayment benefits and workers wouldn’t have to include that money as income.
The bill requires all private insurance plans to cover COVID-19 treatments and vaccine and makes all coronavirus tests free.
UPDATE: On April 14, 2020, the SBA issued a new interim Rule providing further guidance for independent contractors and self-employed people under the Paycheck Protection Program. The most important aspect of this new guidance is that self-employed individuals are eligible for a forgivable PPP loan for up to 8 weeks of their 2019 net profit (still subject to the cap of an annualized amount of $100,000.00).
APRIL 26, 2020: UPDATE TO UPDATE: CONGRESS PASSES ANOTHER FUNDING, SBA FUND ARE BACK (FOR NOW).
APRIL 16, 2020 – UPDATE – THE SBA FUNDS ARE GONE ($350 billion): the funds set aside for this program were gone as of April 16, 2020. Why – because Congress assumed the banks (where the money was initially coming from) and the SBA (where the Act funds were to be controlled) have completely difference business practices. Even between the banks there were different processes for small business to apply for the loans. The process was erratic – someone would apply for funds on day X, only to be told that there were no funds, yet someone applied to the same bank three days later – and there were funds available. There does not appear to any rhyme or reason who was funded, but it is possible that the banks preferred certain customers over others. For instance, Bank of American first offered the loans to customers who had loans or credit cards with the bank. Will there be more money? There is talk Congress may put another $250 billion into the program.
PAYCHECK PROTECTION PROGRAM ‘PPP’ (this is a loan through your bank)
You are eligible to apply for a PPP loan if you are:
A small business with 500 or fewer employees
Defined as “small” by SBA Size Standard that allows for higher employee threshold or is revenue based; or
A small business with maximum tangible net worth up to $15 million and the average net income for full 2 fiscal years prior to application does not exceed $5 million
A 501(c)(3) with 500 or fewer employees
A sole proprietor, independent contractor, or self-employed
A Tribal business concern that meets the SBA size standard
A 501(c)(19) Veterans Organization that meets the SBA size standard
In addition, some special rules may make you eligible:
If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply
Small businesses that have minority shareholders (private equity or venture capital) can still qualify if those stakeholders relinquish rights
Loan Forgiveness for Self-Employed Individuals: The full PPP loan principal amount plus accrued interest is eligible for forgiveness. The amount of forgiveness will be the total amount spent during the covered period on:
payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums);
owner compensation replacement, calculated based on 2019 net profit, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit;
payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business mortgage payments);
rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments); and
utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C (business utility payments).
The bill sets aside roughly $500 billion in loans and other money for big corporations. These companies will have to pay the government back and will be subject to public disclosures and other requirements.
Airlines: About $58 billion is allocated to help airlines stay open. A portion is set aside to help cover employee wages, salaries and benefits divided up as up to $25 billion for passenger air carriers, up to $4 billion for cargo air carriers, and up to $3 billion for airline contractors.
Stock buyback ban: Any company receiving a loan under the program is barred from making stock buybacks for the term of the loan plus one year.
Reporting requirements: All loans, their terms and any investments or other assistance provided by the government must be publicly disclosed.
Oversight: The bill creates a special inspector general to oversee pandemic recovery. That person, along with a special committee, would provide oversight of all loans and other uses of taxpayer dollars.
No benefit for Congress, President, Vice-President, Members of the Cabinet: All are barred from benefiting from the money carved out for corporations. That also extends to the “spouse, child, son-in-law or daughter-in-law.”
All businesses: The bill establishes a fully refundable tax credit for businesses of all size that are closed or distressed to help them keep workers on the payroll. The goal is to get those employees hired back or put on paid furlough to make sure they have jobs to return to. The credit covers to 50 percent of payroll on the first $10,000 of compensation, including health benefits, for each employee.
The Families First Coronavirus Response Act (the Act), will take effect April 2, 2020.
The legislation reflects bipartisan agreement between House Democrats and the Trump administration. It guarantees free coronavirus testing, secures paid emergency leave, enhances Unemployment Insurance, strengthens food security initiatives, and increases federal Medicaid funding to states. It builds on an $8.3 billion emergency coronavirus spending package enacted into law on March 6 (the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020).
“Our top priority in this public health emergency must be providing support to the American people,” said House Appropriations Committee Chairwoman Nita M. Lowey (D-NY). “The Families First Coronavirus Response Act will help ensure the physical safety and financial security of our nation’s working families during this time of crisis. With this bill, we can provide paid leave, guarantee free testing, and enhance important benefits for children and families.”
The new law creates two new emergency leave benefits for eligible employees: (1) emergency paid family and medical leave, and (2) emergency paid sick leave. It generally applies to employers with fewer than 500 employees, with some exceptions.
Up to 12 weeks of Emergency Family Medical Leave (EFML) is available to employees who have been employed a minimum of 30 days and who are unable to work (or telework) because they need to care for their child whose school is closed, or whose childcare provider is unavailable because of a public health emergency. Additionally, the Act provides that:
The first 10 days of EFML is unpaid, but employees may elect to substitute any of the employer’s other paid leave benefits during this period, e.g., paid vacation leave.
After the initial unpaid 10 day period, employers must pay employees at least two-thirds of their regular compensation, up to a maximum of $200 per day or $10,000 in the aggregate.
The FMLA’s job protections apply to EFML, but there is an exemption for employers with fewer than 25 employees, where the employee’s position is eliminated because of economic slowdowns related to the declaration of a public health emergency and the employer attempts to restore the employee’s employment within a year.
The Secretary of Labor is permitted to exempt employers with fewer than 50 employees from the EFML requirements if the Act’s requirements would “jeopardize the viability of the business as a going concern.” We are closely monitoring the Department of Labor for announcements about possible exemptions for small employers.
Emergency Paid Sick Leave (EPSL) is available to all employees for immediate use, regardless of their length of employment. Employees may take EPSL for the following reasons:
The employee is subject to a federal, state, or local quarantine or isolation order due to COVID-19.
The employee has been advised by a healthcare provider to self-quarantine because of concerns related to COVID-19.
The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
The employee is caring for an individual who is quarantined or advised by a healthcare provider to self-quarantine.
The employee is caring for a son or daughter if the school or place of care for the child has been closed, or the child care provider is unavailable because of COVID-19 precautions.
The employee is experiencing any other, substantially similar condition, as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Other aspects of EPSL include:
Full-time employees are entitled to 80 hours of EPSL, and part-time employees are entitled to EPSL in the amount equal to the average amount of hours they work over a two-week period.
There is no carryover of EPSL into the following calendar year, and employers are not required to pay out unused leave upon an employee’s separation from employment.
Employers must pay EPSL to employees in addition to any other leave benefits the employer offers, and employers may not require employees to use any other leave before using EPSL.
If an employee uses EPSL to care for himself or herself for reasons (i)-(iii) listed above, employers must pay the employee his or her regular compensation, up to a maximum of $511 per day or $5,110 in the aggregate.
If an employee uses EPSL to care for a family member or for reasons listed above, employers must pay the employee either two-thirds of his or her regular compensation or the minimum wage, whichever amount is greater. Employers must only pay up to a maximum of $200 per day or $2,000 in the aggregate.
Employers must post a notice about leave entitlements in a conspicuous location within the job site; the Department of Labor is expected to publish a model notice for posting on or before March 25, 2020.
The Secretary of Labor is permitted to exempt employers with fewer than 50 employees from the EPSL requirements if the Act’s requirements would “jeopardize the viability of the business as a going concern.” We are closely monitoring the Department of Labor for announcements about possible exemptions for small employers.
The Act provides employers some financial relief in the form of tax credits on a dollar-for-dollar basis for EFML or EPSL payments to employees, subject to certain caps.
On March 6, 2020, the President signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123). This act provides $8.3 billion in emergency government spending to prevent, prepare for, and respond to Coronavirus Disease 2019 (COVID-19).
The division funds programs that address issues such as developing, manufacturing, and procuring vaccines and other medical supplies; grants for state, local, and tribal public health agencies and organizations; loans for affected small businesses; evacuations and emergency preparedness activities at U.S. embassies and other State Department facilities; and humanitarian assistance and support for health systems in the affected countries. The supplemental appropriations are designated as emergency spending, which is exempt from discretionary spending limits.
Report from the CDC
Below is a summary of the Act from SciPol, Duke University
The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (Public Law 116-123; introduced as HR 6074, 116th Congress), provides funding to various federal government agencies to specifically respond to the ongoing spread of COVID-19 (coronavirus disease) in domestic and international contexts.
The law allocates $7.767 billion of additional, emergency funding (i.e., not subject to discretionary caps), as described here, for specific programs and actions:
Department of Health and Human Services:
Centers for Disease Control and Prevention: $2.2 billion, available through September 30, 2022:
To provide grants or cooperative agreements with state, local, and Tribal governments or health service providers to carry out surveillance, control, mitigation, and preparedness activities, including those that started as of January 20, 2020. (These activities must expend at least $950 million of the total, of which $475 million must be allocated by April 5, 2020);
To support global disease detection and emergency response (at least $300 million of total);
To support the National Institute of Environmental Health Sciences for worked-based training programs designed to limit coronavirus exposure among first responders, hospital employees, or other related workers; these activities must expend at least $10 million of the total.
Office of the Secretary: $3.4 billion, available through September 30, 2024:
To develop and/or purchase vaccines, therapeutic drugs, diagnostic tests, and medical supplies, of which $300 million of the total would be additionally allocated as necessary;
To enhance existing platforms for healthcare response;
To provide grants to build or renovate non-federally owned healthcare facilities that could assist with state- and local-level response, or that could produce vaccines, therapeutic drugs, and diagnostic tests; and
The law further allows the Department of Health and Human Services to easily appoint individuals deemed necessary to perform “critical work” relating to the coronavirus; similarly, the government is able to use the money allocated by this law to hire non-federal contractors for the purposes of addressing the coronavirus.
In addition to these new funding amounts, the law includes the “Telehealth Services During Certain Emergency Periods Act of 2020,” which waives certain permitting and approval processes for telehealth services provided under Medicare when those services are addressing the national coronavirus emergency. In so doing, this section authorizes $500 million to support additional telehealth services; this total combined with the $7.8 billion allocated above reaches the widely-reported $8.3 billion spending mark for this law. This section intends to make telehealth more accessible to Medicare recipients (i.e., some people over age 65) who may have the coronavirus.
SciPol Summary authored by Andrew Pericak, MEM
mation and Resources for Legal Professionals:
Check back regularly as this section is being updated (by Findlaw).
Law Firm Management During Covid-19
Keeping Your Law Firm Operational During an Outbreak
Reassuring Clients During a Crisis
Employer Liability for Covid-19 Exposure (With Links to Relevant Federal Guides)
Resources for Law Students
Unexpected Financial Emergency in Law School? Here Are Your Options
Is It Easier to Get Rid of Student Loan Debt in Bankruptcy Than We Thought?
Resources and Tips for Remote Working
Tips for Staying Productive When Working From Home
How to Effectively Manage Remote Staff
How to Keep Your Wireless Network Secure When Working From Home
MUSINGS FROM DIANE:
Quality information is king. Never take medical advice from someone who wants something from you. Nor should you rely on reports from politicians – most only have one goal – that is to be reelected. Instead, rely on the scientists.
This is a difficult time for everyone, but the good news is that our actions show we care about others. We are following common sense social distancing. We are staying in touch with our friends and family, but in ways not to expose those who are vulnerable.
This too we shall survive, just like those who came before us survived wars, other pandemics and economic depressions. Humans are resilient and adapt to challenges.
Be kind to each other.
3940 words|19.8 min read|Categories: COVID-19|By Diane Drain|Published On: April 13th, 2020|Last Updated: July 10th, 2023|
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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