Protection of Stimulus Payments from Bankruptcy Trustee

Debtors who receive the $600 stimulus payment ($1,200 for eligible married couples with an additional amount of $600 per qualifying dependent) may file bankruptcy without having to use their exemptions to protect the funds in a bankruptcy.

By generally referring to the money as “recovery rebates” under the Internal Revenue Code, this covers not only the stimulus payments provided under the CCA but also the stimulus payments made under the earlier CARES Act and any future stimulus payments, provided that Congress authorizes them under this same Internal Revenue Code provision as an advanced tax refund.