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Federal Employees Expected to Continue Bankruptcy Payments Despite ShutdownThe federal government shutdown is nearing a month, and federal employees have started to miss paychecks. Losing your job income can put a strain on anyone’s budget, but people with a Chapter 13 bankruptcy repayment plan feel under particular pressure. Filers agree to court orders to make regular payments to their creditors, and the payment amounts are based in part on their regular income. When a federal employee going through Chapter 13 bankruptcy stops receiving pay, he or she may not have the money available to make the scheduled payments. 

Missing Bankruptcy Payments

A Chapter 13 bankruptcy trustee receives your payments and distributes them to your creditors. The trustee can file a motion to dismiss your case if you repeatedly miss payments, which would require you to:

  • Fulfill your missed payments;
  • Motion to modify your payment plan; or
  • Allow the dismissal and attempt to refile for bankruptcy.

During the previous government shutdown in 2013, some bankruptcy trustees were willing to delay a motion for dismissal when a federal government employee missed a payment. However, this government shutdown has already lasted for longer than any other on record, and it is unclear when a resolution will be reached. We do not know how patient trustees will be if bankruptcy filers are forced to continue to miss payments.

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National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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