Published On: February 1, 2021

bankruptcyWill you lose your COVID-19 stimulus money if you file for bankruptcy protection?

Simple answer is no.  Read below.
“Recovery rebates” (“stimulus monies”) received as a result of either the CARES Act or CAA are NOT PROPERTY OF THE BANKRUPTCY ESTATE.  Which, in simple English, means the person receiving the funds does not have to give the funds to the bankruptcy trustee.
Title X, Section 1001, of the Consolidated Appropriations Act of 2021 (CAA) contains the bankruptcy relief provisions.  The Act include a temporary revision to the “property of the estate” definition under Bankruptcy Code Section 541 to exclude certain federal COVID relief payments.  Effective date of this Act is December 27, 2020.
See below:


(1) IN GENERAL.—Section 541(b) of title 11, United States
Code, is amended—
(A) in paragraph (9), in the matter following subparagraph (B), by striking ‘‘or’’;
(B) in paragraph (10)(C), by striking the period at
the end and inserting ‘‘; or’’; and
(C) by inserting after paragraph (10) the following:
‘‘(11) recovery rebates made under section 6428 of the Internal Revenue Code of 1986.’’.
(2) SUNSET.—Effective on the date that is 1 year after the date of enactment of this Act, section 541(b) of title 11, United States Code, is amended—
(A) in paragraph (9), in the matter following subparagraph (B), by adding ‘‘or’’ at the end;
(B) in paragraph (10)(C), by striking ‘‘; or’’ and inserting a period; and 2036(C) by striking paragraph (11).


Law is a complicated set of rules and procedures – many unwritten.  It amazes me how many people do not ask for guidance when they are faced with crippling debt.  They live in fear every day and their family is in that same hell.  There are resources to help everyone learn how to handle their money. 

When something bad happens, like health issues, unemployment, death or divorce, it is time to ask for advice from those who care about your welfare and future.  The Internet is seen as the source for all answers.  Want to learn how to knit?  Go to YouTube for some great videos.  Want to learn if someone can take your wages?  Go to an experienced bankruptcy attorney who cares about you and your future.  Be very careful about asking those who are just out to take your money (yes, even some attorneys – several bad Arizona attorneys are discussed in my website).

– Diane L. Drain
Knowledge is Power -light shining on a book
By |Published On: February 1st, 2021|Last Updated: February 24th, 2021|

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About the Author: Diane Drain

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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5 / 5

“You folks are the BEST OF THE BEST in Arizona.” M.H.

You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.

5 / 5

“My only regret is that I didn’t find Diane sooner.” K.H.

I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.

5 / 5

“Filing for bankruptcy can be a stressful life event” R.A.

Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.

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