Federal Workers Weigh Bankruptcy During Government Shutdown

CNN reported last week that the federal government shutdown might force one worker into bankruptcy. As of last week, the federal government went into a full shutdown over healthcare legislation issues bogging down the House and Senate.

It is our hope that by the time this blog is published, a resolution will occur, as the shutdown will affect many workers in the Washington D.C. and Maryland area. According to CNN, federal defense worker Rob Merritt was fearing that he may have to file for bankruptcy if his job is furloughed. “If we were to go into a moderate government shutdown, I’d probably have to file for bankruptcy,” Merritt, 43, who works in information technology at Aberdeen Proving Ground, near Baltimore, told CNN.

Merritt said that earlier this year, when lawmakers were squabbling over the debt ceiling and the sequestration, he was forced to take a furlough for six days and lived mostly off credit cards. More than 800,000 federal workers were ordered to stay home on furlough without pay last week when the government shutdown. CNN described the situation as a “smack-down” for federal workers.

“It is just the latest smack-down from Washington for federal workers still smarting from unpaid summer furloughs,” CNN reported. “What’s more, their pay has been frozen at 2010 levels without annual cost-of-living increases, and salary increases only for those who have been promoted. And just this month, workers learned of a 3.7 [percent] hike in premiums for their 2014 health insurance.”

CNN reported that many workers considered “essential” would be forced to work even though they will not be getting paid until a budget resolution is passed. Paychecks for active duty military members will also be delayed. “Most of our military families live paycheck to paycheck,” said Corrie Blackshear, spokeswoman for Army Wife Network, in an interview with CNN. “They’ve got to pay for car loans and baby formula and all the rest of it.”

Merritt said that while he makes a healthy income, he has high medical bills after he had emergency heart surgery last year. He said his wife was taking care of him following the procedure and she has had trouble finding work. He described a shutdown lasting more than a few weeks as one that would push them over the edge financially.

The ongoing fight in Washington is troublesome for these workers. However, they should know that there is always an option in Chapter 7 bankruptcy. A Chapter 7 bankruptcy allows you to discharge debts like credit card bills and medical bills. When you file for bankruptcy, an automatic stay takes effect, and creditors cannot pursue legal action against you or pursue wage garnishment. This would be particularly useful for someone whose creditors include medical care providers and credit card companies.

If you are struggling with debts, you can contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.

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