Government Shutdown & Your Bankruptcy Case: What You Need to Know Now

As a bankruptcy attorney, I understand the anxiety that comes with news of a federal government shutdown. If you have a Chapter 7 or Chapter 13 bankruptcy case pending, your first question is likely: ‘Will the court close, and will my 341 Meeting of Creditors be canceled?’

The short answer is: It’s highly unlikely your 341 meeting will be canceled, but you should still pay attention to delays in other parts of your case. Here is a clear breakdown of which parts of the bankruptcy system are insulated from the shutdown and which parts are at risk.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

The Good News. Why Your 341 Meeting is (Usually) Safe from the Federal Government Shutdown

The reason your Section 341 Meeting of Creditors is likely to proceed is simple: the person running it is not a federal government employee.

• The Chapter 7 and 13 Trustees are Not Federal Employees: The Trustees who conduct 341 meetings are private contractors appointed by the U.S. Trustee Program. Their salaries and office operations are funded by filing fees and a percentage of the assets or plan payments they administer, not by Congressional appropriations.
• Virtual Meetings Help: Since the pandemic, nearly all 341 meetings have moved to virtual video platforms (like Zoom). This removes the need for physical courthouse access, further insulating the process from initial shutdown logistics.

Professor’s Note: Unless you hear from your attorney or the Trustee directly, plan to attend your 341 meeting as scheduled.

The Potential Slowdown. Where Delays Can Occur

While the 341 meeting itself is often safe, a prolonged shutdown can create a critical bottleneck elsewhere in the system: the U.S. Trustee Program (USTP) and the Federal Judiciary (Courts).

• Furloughed Oversight Staff: The U.S. Trustee Program (USTP) staff are federal employees as a branch of the Department of Justice. They provide essential oversight, such as reviewing means tests, investigating cases for fraud, and litigating disputes. These employees are generally furloughed, meaning their oversight and involvement will stop or be severely reduced. This can slow down complex case administration and approvals.
• Court Operations: Federal Bankruptcy Courts are part of the U.S. Judiciary. They are legally permitted to use existing funds (like case filing fees) to continue full, paid operations for a limited time (historically 2-3 weeks).
• Risk of Prolonged Shutdown: If the shutdown extends beyond this initial funding window, the courts will have to move to “essential functions only” staffing. This means judges will continue to serve, but non-essential staff will be furloughed, leading to:

Major delays in filing processing, scheduling, and issuing discharge orders.

Postponement of hearings, trials, and plan confirmation motions.”

My Expert Advice on the Government Shutdown

What does this mean for a debtor? The main takeaway is that delay is your biggest risk, especially if your case involves any complexity.

1. File Now, Don’t Wait: If you are contemplating bankruptcy, a shutdown is not a reason to wait. Filing creates the Automatic Stay immediately, which stops foreclosures, garnishments, and collection calls, and the courts will accept your filing electronically regardless of the shutdown.
2. Keep Paying Your Chapter 13 Plan: Do not assume the shutdown affects your obligation. Continue making your Chapter 13 plan payments on time. The Trustee’s office remains open.
3. Consult with a Bankruptcy Lawyer: The operational status of the courts changes daily during a shutdown. The status can also change from one district to the next.

The Professor’s Final Words:

When Congress and the federal government face a funding crisis, headlines can understandably heighten anxiety, especially for those already facing financial hardship. However, it’s important to note that the core protections of the bankruptcy system, specifically, the Automatic Stay, remain in place.

Your immediate focus should be on filing the bankruptcy petition and preparing for your 341 meeting. Even if a prolonged government shutdown causes administrative delays at the federal court level, it will not derail your path toward discharge.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.