Bankruptcy Courts Will Feel Effect of Government Shutdown

DURHAM, N.C. - Oct. 1, 2013 - PRLog -- DURHAM, N.C. – Under the constitution, specifically Article 1, section 8, Clause 1, Congress has the responsibility to pass laws that authorize government spending. If Congress refuses to pass these laws, the government can’t spend money. The result of the roadblock?  A government shutdown.

This funding shutdown has different effects on different parts of the federal government, but those effects are far-reaching. They even extend into bankruptcy courts across the nation.

Shutdown’s Effects on Bankruptcy Courts

Bankruptcies must be filed in one of 94 federal district courts, and those courts operate with federal dollars. According to Treasury Secretary Jacob Lew, the courts have enough money to operate until about October 17th. After that, however, there could be significant delays for people who have filed, or plan on filing, for bankruptcy protection.

·         Meetings of the Creditors Delayed. Whenever an individual files for bankruptcy, the bankruptcy trustee will schedule a meeting of the creditors. This is called a 341 meeting, and it takes place between three to six weeks after filing. If the shutdown lasts longer than about 15 days, expect significantly delayed, or even cancelled, 341 meetings.

·         Chapter 13 Plans Put on Hold. In a Chapter 13 bankruptcy the debtor seeks to restructure debt by entering into a repayment plan with his or her creditors. This Chapter 13 payment plan has to be approved by the bankruptcy court. If the shutdown lasts past October 17th, you can expect the court to stat delaying confirmation of Chapter 13 repayment plans.

·         Delayed Hearings. The shutdown will also likely put a delay on any other bankruptcy-related hearings. In 1995, when the last shutdown took place, bankruptcy courts suspended all progress on more than 3,500 cases.

What North Carolina’s Bankruptcy Courts Have Said.

The Eastern District Bankruptcy Court on its website says:

Unless otherwise notified, the United States Bankruptcy Court for the Eastern District of North Carolina will continue to operate and perform essential functions necessary for the administration of bankruptcy cases throughout any government shutdown.

The Middle District simply states:

Until further notice, the Court shall remain open in the event of a government shutdown.

QUOTES:

“There are members of Congress that view the government shutdown as some kind of partisan strategy move,” says Durham Bankruptcy attorney Jim White.  “But they need to understand that this has real world consequences for people like bankruptcy debtors, who will be hurt by this.”

ABOUT THE LAW OFFICE OF JAMES C. WHITE:

The Law Office of James C. White P.C.’s practice is focused on complex litigation and debtor bankruptcy.  Their cases usually involve serious financial injury and their philosophy is simple: they do not care about the size of a case – they take cases where they can have a distinctive, lasting and substantial impact. Clients range from high-net-worth individuals and successful small to mid-sized businesses with millions of dollars at stake to people who have lost their homes through foreclosure fraud. The firm has negotiated large settlements with financial institutions and has pursued complex business torts, class action and securities litigation. It also represents individuals and companies, using bankruptcy to help them navigate through financial problems, fight wrongful foreclosures and keep them in their homes.   For more information, visit http://jcwhitelaw.com.