Communication with consumers and clients would be critical during a shutdown, which could also shift government activities and rulemakings related to the ARM industry.
09/29/2023 3:15 P.M.
4 minute read
ACA International is tracking what would happen at government agencies related to the accounts receivable management industry as well as implications of a shutdown for consumers and businesses without passage of several funding bills by Congress that were pending at press time.
Current government funding expires at midnight, Saturday, Sept. 30.
For one, approximately 2 million civilian federal employees may face delays in their paychecks if they are furloughed or have to work without pay, and an estimated 4 million federal contract workers could receive no pay during a shutdown, according to NPR.
ACA encourages members to use their judgment and discretion when contacting consumers who may be impacted by a government shutdown and consult with their counsel for guidance if needed.
Much like during the COVID-19 pandemic, members can implement hardship programs to limit calls to consumers and/or set up payment plans to help them manage their accounts when communications resume.
In a 2019 letter (PDF) to House Financial Services Committee during the last government shutdown, ACA noted the benefits of consumer-creditor communications during times of financial hardship.
The last shutdown four years ago lasted just over a month, but was only a partial shutdown since Congress had passed some of its funding bills for agencies—particularly the departments of Defense, Labor and Health and Human Services, The Hill reports.
What Stays Open?
If there is a government shutdown, federal services and agencies have different contingency plans.
“Agency operations considered non-essential will come to a halt, meaning that pending rulemakings will face delays and litigation may be put on hold in some instances. In general, expect major reductions in staffing and operations at agencies funded by the congressional appropriations process,” according to a memo from Brownstein Hyatt Farber Schreck. “A shutdown lasting only hours or days is likely to only have minimal impacts, but the longer it continues the more significantly it will hinder agency operations and rulemaking agendas.”
The U.S. Supreme Court would stay open, which means the oral arguments in the case on the Consumer Financial Protection Bureau’s funding structure Oct. 3 could still happen, and federal courts have enough funds to operate until at least Oct. 13, according to Reuters.
The CFPB, with its funding structure through the Federal Reserve and not Congress, would stay open. However, the bureau’s process to conduct a Small Business Regulatory Enforcement Fairness Act Panel to discuss possible economic and compliance implications of its Fair Credit Reporting Act rulemaking proposals may be put on hold. The panel includes representatives of the Office of Management and Budget, which is subject to government funding and therefore could be impacted by a government shutdown.
Agencies like the CFPB that are funded outside of congressional appropriations will not be directly impacted during a shutdown, “but non-essential external engagement with industry stakeholders may decline or pause,” according to the memo from Brownstein. Any actions or rulemakings that may require participation from agencies funded through appropriations will likely be impacted.
The U.S. Small Business Administration, also part of the SBREFA panel, would continue only those excepted functions under various justifications and initiate orderly shutdown of activities not considered exempt or excepted if an annual appropriations act or continuing resolution is not enacted for the agency, according to its contingency plans last updated in 2021.
The Federal Communications Commission will cease all activities other than those “immediately necessary for the protection of life or property, performing other excepted activities or those funded through a source other than lapsed appropriations,” according to its plans (PDF).
The Federal Trade Commission has similar contingency plans (PDF).
Student Loans
More than 30 million federal student loan borrowers are set to resume their payments Oct. 1 after a series of pauses in the last three years.
With the same date of Oct. 1, Congress is working to avoid a government shutdown, according to a report from The Hill. The last proposal on the defense funding bill at the center of the shutdown risk from House Speaker Kevin McCarthy failed to get votes from some of his Republican colleagues, according to the article.
If there is a government shutdown, the DOE has a “contingency plan,” as do all other federal agencies, but there hasn’t been an update since 2021—when student loan payments and interest were paused, The Hill reports.
The plan states that federal loan servicing could continue, but only for a “limited time” and operations could experience “some level of disruption.”
Even if the government shutdown is avoided, the DOE is instituting a 12-month plan for borrowers whose payments will resume Oct. 1, ACA previously reported. Those who miss payments from Oct. 1, 2023, to Sept. 30, 2024, will not be “considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies” during that time, according to a DOE fact sheet.
ACA is monitoring the possible government shutdown and will provide updates to members on implications for the accounts receivable management industry.
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