What Does the 2013 Government Shutdown Mean for Your Bankruptcy Case?

On October 1st, 2013, the United States Federal Government entered a period known as “shutdown.” The most recent shutdown occurred during the Clinton administration and lasted for nearly a month. In the 1980s, on the other hand, there were several shutdowns during Ronald Reagan’s presidency that lasted as little as two or three days. Even these small pieces of information can serve as a sort of microcosm for what to expect (or not) during Federal shutdowns: it’s always different, and there’s always a degree of uncertainty.


Events Leading To The 2013 Shutdown

Government shutdowns have been happening sporadically for nearly four decades, each with their own cause. In 2013, it’s a matter of funding — or the lack thereof. At the basic level, government spending must be approved by the President, as well as by Congress, which consists of the House of Representatives, and the Senate. If the two components of Congress cannot agree on spending — this time around, the gridlock pertains to Obamacare (officially, the Patient Protection and Affordable Care Act) — they cannot then approve spending. If they cannot approve spending, no spending can occur. If no spending can occur, the government enters a shutdown period while the stalemate struggles to be resolved.

What The Shutdown Means For Bankruptcy Proceedings

The 2013 shutdown, like previous shutdowns, does guarantee one thing: the temporary closure of multiple governmental services and bureaus deemed non-essential. A whopping 800,000 public servants have been furloughed — placed on leave without pay, for an indeterminate amount of time — and the toll on the already struggling American economy has been estimated by IHS, Inc. at a loss of $300 million per day, at least initially.

Where matters of bankruptcy come into play, the effects of the shutdown might be a little more predictable, which is a cold-comfort sort of good news for businesses and consumers already wading through the process.

Reuters reports that on one hand, the Department of Justice — which you may recall being deemed non-essential, while the shutdown is in effect — will curtail “non-critical” civil litigation. On the other hand, Federal courthouses (which include the Bankruptcy Court) will remain open during the shutdown, per the Anti-Deficiency Act.

The courts are expected to be able to tread water for several weeks, drawing on funds from the reserves of long-term appropriations (bills authorizing government spending), as well as filing fees. After that brief period, however, non-essential employees would be furloughed, with the Chief Judge of each district deciding on essential versus non-essential personnel.

Court House

While nothing is certain during a government shutdown, the official site of the United States Courts has this to say:

“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.”

What if You Were Planning on Filing for Bankruptcy in the Coming Weeks?

If you were thinking about filing for bankruptcy in the near future and you are up against a time constraint, you may want to consult an experienced bankruptcy attorney to help make sure things go smoothly.  The bankruptcy attorneys at Maselli Warren have been representing individuals in bankruptcy proceedings in Pennsylvania and New Jersey for over 15 years. We can help so that your filing is not negatively affected by the Government shutdown.