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Is government shutdown slowing bankruptcy cases?

Bankruptcy courts in the United States are open for business despite the continuing partial shutdown of the government. That does not mean that the courts are operating at full steam.

The concern that raises among some observers is that consumers and businesses who may be in desperate need of debt relief through bankruptcy may find the process running much slower than usual. The U.S. Justice Department confirms that the Trustee Program is only being staffed at one-third of normal levels. That's the program tasked with monitoring bankruptcy cases through the system to ensure the rights of all stakeholders, debtors and creditors alike.

As of the first of the month, officials in the busy bankruptcy jurisdiction of Southern New York, which includes Manhattan, were saying that they had enough funds to keep skeleton operations going for 10 days.

They said they didn't know for sure what would happen when that window closed, though they noted that judges and court employees have been deemed essential employees. Apparently we will begin to see what will happen in just a few days unless the shutdown is resolved.

Shy of any resolution, the bankruptcy court's top judge has issued an order saying that delays will be the norm in any bankruptcy suit or other contested matter until the day after a law restoring Justice Department funding has been signed by the president.

What all this means for readers of this blog is that the bankruptcy system remains open in Texas districts for now. That could well change if the shutdown goes on much further. As with all issues related to bankruptcy matters, it's best to consult with an attorney to be certain of your options.

Source:, "Government Shutdown Hits Bankruptcy Watchdogs," Joseph Checkler and Stephanie Gleason, Oct. 1, 2013

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