Will a second COVID-19 stimulus check affect a bankruptcy case?

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Will a second COVID-19 stimulus check affect a bankruptcy case?

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Across the United States, Americans are struggling to maintain their way of life throughout this long-stretching pandemic. Even families that were previously financially stable are now finding it difficult to keep up with bills and support their lifestyles. While those who were already having difficulty making ends meet may feel like their entire livelihood is being threatened. For many individuals, filing for bankruptcy has been the only hope they have for regaining their financial footing and keeping their homes. For those who have filed or are going to fill for bankruptcy, questions about the way that COVID-19 stimulus checks may affect the process weigh heavily on their minds.

The COVID-19 Stimulus Check’s Impact on Bankruptcy

During the midst of the pandemic, the CARES Act provided struggling families across the nation with much-needed stimulus checks. As you probably know, these checks gave low-income individuals each $1,200 along with $500 for each of their children. For many, these checks were used to cover food and immediate expenses while their jobs were shut down and unemployment was difficult to obtain. While the stimulus checks seemed like a blessing, they left people wondering how their bankruptcies would be impacted.

The Bottom Line

Thankfully, the COVID-19 stimulus check makes no impact at all on one’s bankruptcy. Lawmakers behind the checks made sure that it would be used to help struggling families and not hurt them, so they put a fine-print statement that it cannot be used against the recipient if they are filing bankruptcy. If you are in the midst of filing, rest assured that the check you received, or will hopefully receive soon again, for your stimulus will not stall the process; likewise, if you need to file, you can start moving forward without fear of your stimulus check stopping you. The CARES Act checks are tax-free and are not counted as income in any way. The upcoming stimulus check, whether the HEROS Act or another proposal, is expected to follow similar guidelines.

The Next Round of Stimulus Checks

As Americans anxiously await the hopes of a second round of stimulus checks, we can surmise that it will also have a clause that prohibits the stimulus from stopping bankruptcy proceedings. Instead of feeling like you need to choose between taking your check and filing for bankruptcy, you can rest your mind at ease as you do both. 

How to Best Use Stimulus Checks During Bankruptcy

Now that you know you can both receive your stimulus check and file bankruptcy, you may be unsure where to spend the money you get from the government. Our suggestion is to spend the money on immediate necessities such as food – don’t try to pay off bills that are too out-of-control to manage. You may also decide to put the money toward beginning the bankruptcy process. By using your stimulus check to file for bankruptcy, you can ensure yourself a better, more worry-free tomorrow.

The current pandemic has been difficult for everyone. Thankfully, you can enjoy some peace of mind that you are free to use your stimulus money while also pursuing the bankruptcy that can get you back on your financial track!

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