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Published: January 2019

How the government shutdown puts working families at risk

As the longest federal government shutdown in our nation’s history drags on, advocates raised concern as to how working families could potentially be harmed long after the government reopens its doors. Without a paycheck, federal employees fear losing their homes, consider risky financial loans in lieu of income, tax credits and refunds, and worry about the lasting impact that missed bill payments will have on their credit.

Families who rely on income from a federal employee are bracing for difficult times as the longest government shutdown on record continues. Families working on avoiding home foreclosure are unable to obtain hardship assistance while the government is closed. Delayed IRS tax refunds and credits (Earned Income Tax Credit and Additional Child Tax Credit), which supplement modest wages, could result in long-term financial struggle for households who may have no choice but to turn to harmful financial products and risky loans. Late payments on mortgages, student loans, credit cards and other financial obligations could impact credit reports and credit scores. These financial implications will be felt long after the government re-opens.

Advocates wrote a letter to Agriculture Secretary Perdue on behalf of government employees, urging the USDA to cease all foreclosure activity on direct and guaranteed single family home loans during the government shutdown. This stay should include postponing timelines for borrowers to obtain the loss mitigation options available under these programs. Many homeowners with direct and guaranteed loans are unable to obtain hardship assistance while the agency is closed because the Department plays a critical role in approving alternatives to foreclosure in both programs.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Advocates for Basic Legal Equality, Inc. (Ohio) | Americans for Financial Reform | Education Fund | California Reinvestment Coalition| Center for NYC Neighborhoods | Center for Responsible Lending | Connecticut Fair Housing Center | Consumer Action | Empire Justice Center (New York) | Legal Aid Society of Southwest Ohio, LLC | Mountain State Justice, Inc. (West Virginia) | National Community Reinvestment Coalition (NCRC) | National Consumer Law Center (on behalf of its low-income clients) | National Fair Housing Alliance |National Housing Law Project | Woodstock Institute

More Information

Click here to read the full letter.

For more information, visit NCLC.

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