Pre-Pandemic Chapter 13 Defaults Received CARES Act Modification Protection in the Middle District of AlabamaIn a notable decision interpreting the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Bankruptcy Court for the Middle District of Alabama held that Chapter 13 debtors behind on their payments before March 2020 may seek modification of their plan if they suffered from COVID-19 related financial distress.

In In re Fowler, No. 16-31791; In re Lewis, No. 19-32243, 2020 WL 6701366 (Bankr. M.D. Ala. Nov. 13, 2020), Bankruptcy Judge William R. Sawyer held that there are only two hurdles to receive modification protections under the CARES Act: (1) The plan was decided before March 27, 2020, and (2) the debtor is “experiencing or has experienced a material financial hardship due, directly or indirectly, to COVID-19.” The opinion therefore provides a basis for borrowers to argue that the CARES Act is available not only to those who were current on their plans when the pandemic hit but also those who were in default before the pandemic.


The case involved two Chapter 13 filings where individuals were in default on their payments before the coronavirus pandemic hit. The first concerned Consoella Randolph Fowler, who filed a Chapter 13 Petition for Relief in 2016 and had her Chapter 13 plan confirmed in September 2016. Nonetheless, in September 2019, a motion to dismiss her case was filed due to her missed payments. The hearing was continued to monitor Fowler’s payment progress. In August 2020, Fowler moved for modification protection under the CARES Act, requesting a lower payment amount and frequency of payments, as well as an extension in the length of her plan. The modification request did not seek to reduce the amount of money owed. Fowler was on a fixed income but argued that she had increased expenses after the pandemic due to the need to take care of sick family members. But for Fowler’s default, she would have completed her plan before the CARES Act was enacted.

The second matter involved Anbrial Alexis Lewis, who filed a Chapter 13 Petition for Relief in 2019 and had her plan confirmed in December 2019. However, in June 2020 the trustee filed a motion to dismiss her case due to missed payments. Lewis responded that her lapse in payments was due to her reduction in hours resulting from the COVID-19 pandemic. In August 2020, Lewis moved to modify her plan under the CARES Act, requesting a lower payment and an extension in the length of her plan. The requested modification did not reduce the amount of money owed.

In both cases, the trustee objected to the plan modification, in part, due to the debtor’s pre-pandemic defaults.


The court found that both cases were afforded modification rights under the CARES Act because the borrowers both had established plans before March 2020 and were suffering material financial hardships due to the pandemic. Fowler’s financial hardship was indirect, but nevertheless present. Her fixed income did not alter the analysis. On the other hand, Lewis’ financial hardship was direct. Although the trustees objected to the plan modifications based on the debtor’s pre-pandemic defaults, the court found this to be imposing a third requirement to modification under the CARES Act that doesn’t exist. In reaching this conclusion, Judge Sawyer stated “[i]f Congress intended to limit § 1329(d) modification to debtors who were current on their plan payments prior to the enactment of the CARES Act, it certainly could have done so, but the plain language of the CARES Act does not contain such a restriction.”


Even if a Chapter 13 debtor was in default before the COVID-19 pandemic, the CARES Act modification protections may still apply. This could allow debtors to modify their plans and extend them for up to seven years from the due date of their first payment under the original plan.