Government Shutdown and Bankruptcy

The Government Shutdown

It’s official. At midnight on October 1, 2013, the United States government shutdown for the first time since the 1995 – 1996 shutdown.

Congress hasn’t been able to reach an agreement on the spending bill, and it’s likely that the average American will be stuck paying the consequences. Accordingly, 800,000 federal employees were deemed non-essential and won’t be receiving their regular paycheck.

It’s not known what the exact impact of the government shutdown will have on the United States economy since nobody knows how long the shutdown will last. However, it seems to be undisputed that a shutdown lasting longer than a few weeks will cut economic growth substantially.

Government Shutdown

Federal Courts Remain Open

The good news for those struggling with debt is that, because of the Anti-Deficiency Act, the federal courts will remain open and functioning during the government shutdown – at least until October 15th. The Act mandates that “essential” government work must continue in the event of a federal funding shortfall. So if you have recently filed a bankruptcy petition, or are considering bankruptcy as a debt-relief option, you won’t experience any additional obstacles.

The Administrative Office of the U.S. Courts posted a statement on their website in regards to the government shutdown. The statement basically says that the federal courts will conduct business as usual until October 15th. At that point, if the government shutdown is still in effect, the Judiciary will reassess it’s financial situation and decide whether operations can continue during the shutdown. However, the statement makes a point to note that any and all scheduled deadlines remain in effect at this time.

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