The government shutdown is finally over. But for many federal workers, the financial stress is just starting. Weeks without pay forced thousands to lean on savings — and take on debt — to stay afloat.
Now that paychecks are flowing again, it’s time to assess the damage and take steps to rebuild your financial stability.
Assessing Your Financial Situation After the Shutdown
If You Used Hardship Programs Successfully
If you took advantage of lender hardship programs or payment deferrals, that likely helped ease the burden of covering your bills while you weren’t receiving an income. However, now that the shutdown has ended, those deferred payments are likely to resume soon.
So, review your statements to confirm when normal billing cycles restart, and be prepared for any catch-up payments you might owe. Adjust your budget accordingly so you’re not caught off guard by larger-than-expected bills.
If You Missed Payments During the Shutdown
If you fell behind on payments, start by checking your recent credit card statements and your credit report. Determine whether any late payments were reported to the credit bureaus. Even a single 30-day late payment can significantly lower your score, and negative marks can remain on your report for up to seven years. Knowing what damage has occurred will help you prioritize your recovery plan.
If You Accumulated New Debt
Many federal employees relied on credit cards to cover essentials during the shutdown. But high balances — and the compounding interest that comes with them — can quickly snowball. Your back pay might not be enough to cover everything, so it’s important to make a plan for repayment ASAP.
At the very least, ensure you make all the minimum payments on your credit cards and other debts. This ensures that you don’t harm your credit or get hit with late fees.
Then take a look at your current balances and corresponding interest rates. The most cost-effective way to prioritize debt repayment is to tackle the balance with the highest interest rate first while making the minimum payments on everything else (this is known as the debt avalanche method). Once that balance is paid off, you can turn your efforts toward the debt with the next-highest rate, and so on.
Relief May Still Be Available
Post-Shutdown Assistance Programs
Even though the shutdown has ended, some lenders are extending grace periods or special relief programs to help workers transition back to normal payments.
Contact your creditors directly to explain your situation. They may be willing to offer a payment plan, temporary forbearance, or waived late fees to help you catch up.
Catching Up on Deferred Payments
If you deferred payments, it’s important to understand that the money owed wasn’t forgiven; they were simply postponed. Review the total amount you owe and the due dates for repayment. Build a realistic plan to resume payments without stretching your budget too thin. Setting up automatic payments can also help ensure you don’t miss due dates as you readjust.
Requesting Goodwill Adjustments
If you were generally able to keep up with your bills, but ended up missing a payment during the shutdown, consider asking your lender for a “goodwill adjustment.” Explain that you’re a federal employee affected by the government shutdown and that your payment history is otherwise strong.
Although it’s not guaranteed, some lenders will remove a late payment report as a courtesy in isolated cases, especially when you previously had a good track record and the reason for missing a payment is largely beyond your control.
The Damage That May Have Already Occurred
Credit Score Impact You’re Facing Now
If your credit card issuer or lender reported late payments to the credit bureaus, you might already see a dip in your credit score. Unfortunately, those negative marks will linger for years, and likely lead to higher interest rates on future loans and credit cards (or even difficulty qualifying for new credit altogether).
Now is not the time to take on new debt. Instead, focus on paying down your existing debts and working to improve your credit score. Making your payments on time is one of the best ways to improve your credit, since payment history makes up 35% of your score. “Amounts owed” makes up another 30% of your score, so paying your balances down over time will also go a long way toward building your credit back up.
Debt That Accumulated During the Shutdown
Any debt you built up during the shutdown continues to accrue interest daily. Even with back pay, many workers may find they still owe more than expected once interest is factored in.
Making only the minimum payments can prolong repayment and make recovery harder, though that may be your only option for now. Remember, making the minimum payment is preferable to being late or missing payments.
Risk of Ongoing Financial Problems
It’s important to understand that if you fall behind on payments for 90 days or more, accounts can enter collections or be charged off entirely. That not only causes significant harm to your credit score, but can eventually lead to legal action. If you’re sued by a creditor and lose the case, they may be able to pursue wage garnishment or freeze your bank accounts to recover the debt.
Again, it’s important to act quickly and prevent a short-term problem from turning into a major debt crisis. If you think you’re at risk of missing payments, it’s best to be proactive and reach out to your creditors before that happens.
Steps Federal Workers Should Take Now That Shutdown Has Ended
Review Your Credit Card Statements and Credit Report
Start by reviewing all your accounts. Check for late payment notations, verify balances, and note when normal billing cycles resume.
You’re also entitled to a free credit report from all three credit bureaus at AnnualCreditReport.com. Review all three reports and assess what damage has been done.
Once you understand your full financial picture post-shutdown, you can begin creating a plan to get your finances back in order.
Contact Creditors About Your Situation
Even though the shutdown has ended, communication is key. Let creditors know you’re a federal employee recovering from the financial impact and ask about payment plan options for any accumulated debt. If you missed a payment, request a goodwill adjustment or temporary relief as you get back on your feet.
Create a Recovery Budget
If you’ve already received or are expecting back pay, use it strategically. Prioritize essential bills, such as housing, utilities, and food, as well as minimum debt payments.
And don’t assume your back pay will solve everything. Instead, build a bare-bones budget that cuts most, if not all, discretionary spending so you can focus on covering your essentials and slowly building up a cash buffer. Remember, this is temporary.
When Shutdown Debt Becomes Unmanageable
Signs the Damage Is Too Severe to Handle Alone
If your back pay doesn’t cover the debt you accumulated — or you’re already receiving collection calls or legal threats — it may be time to seek professional help.
Other warning signs include maxed-out credit cards, multiple creditors demanding payment, or an inability to keep up with minimum balances. This type of situation isn’t sustainable, and you don’t have to solve it on your own.
How Tayne Law Group Can Help Federal Workers Recover
Tayne Law Group specializes in helping individuals and businesses recover from financial crises like the recent government shutdown. Our team of experienced attorneys can:
- Negotiate settlements on debt accumulated during the shutdown
- Protect you from aggressive collection tactics
- Explore debt relief and restructuring options
- Help repair financial damage and rebuild credit
We offer a no-obligation consultation to review your post-shutdown financial situation and create a personalized plan to help you get back on track. With more than 25 years of experience, know that the team at Tayne Law Group, P.C. is here for you. We tailor our debt relief solutions to your specific situation and can help you navigate the tricky legal process.
The shutdown may be over, but for many federal workers, there’s a long road ahead to financial recovery. The sooner you assess your situation, the faster you can repair any credit damage and regain control of your finances.
If your back pay isn’t enough to cover what you owe, contact Tayne Law Group today to explore your options. Call our law firm for a consultation at 866-890-7337 or fill out our short contact form, and we’ll get in touch.
