Consumer Debt During a Government Shutdown


Struggling with debt can be both frustrating and discouraging, especially when it feels as though you are not making any headway despite the fact that you continue to make payments on high-interest credit cards and other debt. Trying to deal with debt can be even more difficult for government employees during a government shutdown. While some government employees have savings to cover financial setbacks resulting from a government shutdown during which they do not receive a regular paycheck, that simply is not the case for most workers.

According to a recent report from CNBC, a majority of government employees live paycheck-to-paycheck. Accordingly, not only will government employees who already are struggling with debt find themselves in a more distressing situation with a shutdown, but even employees without significant debt may find themselves in debt as a result of the shutdown. Given the length of the recent shutdown, we want to take a closer look at how a government shutdown—including the current one—affects debtors, consumer bankruptcy decisions, and debt collection practices.

Nearly 80% of Government Employees Live Paycheck-to-Paycheck

As the CNBC report explains, 78%, or four out of every five government employees, currently lives paycheck-to-paycheck. As such, even missing a single paycheck can mean that a government employee accrues additional credit card debt that could become revolving debt if another paycheck does not come soon. For government employees who already are unable to make monthly mortgage payments or to pay other bills, a government shutdown can put them further into debt.


Why does a government shutdown—even a partial shutdown like the current one—result in so many workers not being paid? Generally speaking, some workers are furloughed, which means that they essentially are sent home from work without pay until the government reopens. Other workers, such as Transportation Security Administration (TSA), are required to continue working without pay. According to a CBS News report, the recent government shutdown has resulted in approximately 420,000 government employees going without pay. If we consider the percentage of those employees who are living paycheck-to-paycheck, approximately 327,600 government employees are going into debt in order to make payments on their bills. January 22, 2019 marked one month since the government entered the shutdown.

Cycles of Debt as a Result of a Government Shutdown

According to an article in the Financial Times, a government shutdown like the one that began on December 22, 2018 benefits lenders that can be unscrupulous and unfair to consumers, including pawn shops and payday lenders that charge exorbitant interest rates on loans. For government employees who were considering bankruptcy before the shutdown, the failure to receive a paycheck could be the event that leads to the decision to file for bankruptcy.
Debt collectors can continue to seek payments from consumers during a government shutdown. While some creditors may offer relief for government employees, they are not required by law to do so.
Contact a Consumer Bankruptcy Lawyer in Oak Park
If you are struggling with debt or have questions about your rights as a consumer, you should speak with an Oak Park consumer bankruptcy lawyer as soon as possible. Contact the Emerson Law Firm to learn more about the consumer protection services we provide to clients in the greater Chicago area.

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