How the 2013 Government Shutdown Affects Your Bankruptcy

On October 1st, 2013, the Federal Government of the United States of America entered its eighteenth shutdown since 1976. Of the seventeen preceding shutdowns, the longest (and most recent, bridging 1995-1996) lasted for close to a month, while the shortest lasted for only a day. Shutdowns have occurred under Republican and Democrat administrations, with reasons ranging from abortion to aircraft carriers. While the details of each shutdown are different, each is met with feelings of anxiety and uncertainty about what will change after the stalemate — and what will come next.

Business Laws

The 2013 Shutdown: Background

For government spending to occur, the spending proposed must be approved by the President, and by Congress, which consists of two elements: the House of Representatives, and the Senate. If the House and the Senate are trapped in gridlock and cannot reach an agreement — as they are now — they cannot move on to the next step: actually approving the spending. And if spending can’t be approved, it can’t be put into effect. The issue causing so much trouble this time around is the Patient Protection and Affordable Care Act (better known by its nickname, Obamacare). But while Republicans and Democrats battle it out in Washington, what are the implications for those individuals already working through bankruptcy?

How The Shutdown Affects Bankruptcy

The shutdown earns its name: a long list of governmental departments determined to be “non-essential” will temporarily be shut down. This list of expendables includes, among others, the Department of:

  • Agriculture
  • Labor
  • Commerce
  • Energy
  • Defense
  • Education

…and it doesn’t end there. The Department of Justice is among their ranks, which might understandably alarm consumers already wrapped in bankruptcy proceedings: are the courts even going to be open for hearings?

There’s good news and there’s bad news, and, strangely enough, they’re the same thing: it’s a game of yes-and-no. On one hand, because of the Anti-Deficiency Act, Federal Courts (of which the Bankruptcy Courts fall under) will stay open — at least until October 15th. It’s been estimated that, drawing on their reserves, the courts will be able to keep themselves breathing for about two weeks — after that time, the situation will need to be reassessed. However, the languishing Department of Justice has warned that civil litigation that is “non-critical” will be postponed. Federal public defenders and other court personnel may ultimately have to be furloughed — put on leave without pay, for a yet undetermined period of time — and in that case, the decisions regarding “essential” and “non-essential” workers and services will be left to the chief judge of a given district.

Image of two young businessmen using touchpad at meeting

On September 26th, the official website of the United States Courts issued this statement: “In the event of a government shutdown on October 1, 2013, the Federal Judiciary will remain open for business for approximately 10 business days. On or around October 15, 2013, the Judiciary will reassess its situation and provide further guidance. All proceedings and deadlines remain in effect as scheduled, unless otherwise advised. Case Management/Electronic Case Files (CM/ECF) will remain in operation for the electronic filing of documents with courts.”

After the 15th, the progress of the shutdown will call for a new look at the situation of bankruptcy courts. But until then, you can probably breathe easy.

Have You:

Been paying credit card balances that seem to never go down?

Lost your job and are now having trouble keeping up?

Attempted to work out a payment arrangement to no avail?

Been notified of a mortgage foreclosure action?

Been denied for a mortgage or other line of credit?

If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.

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