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In the event of a federal government shutdown, it may be the U.S. bankruptcy courts that keep the federal judiciary humming.

A bankruptcy judge approved a deal struck between a former law partner of Ponzi-scheme operator Scott Rothstein and the bankruptcy trustee suing that partner for several hundred thousand dollars.

Judge Raymond B. Ray of the U.S. Bankruptcy Court in Fort Lauderdale, Fla., on Friday approved a settlement that frees former partner Russell Adler from litigation in exchange for up to $500,000, court papers show.

Once the bankruptcy case is filed, an automatic stay is created. This automatic stay prohibits creditors from contacting debtors directly and prevents further collection efforts. In many instances, the creditors will not receive notice of the bankruptcy proceedings or will be contacting debtors during the interim of the filing and the time in which notice is received. In those instances, the debtor can advise the creditor of the case filing information or refer that creditor directly to their lawyer’s office.

Chapter 13 bankruptcy can often provide the greatest chance to save a home that is in foreclosure. In addition to the proposed plan to repay mortgage arrears and other creditors, there is often a secondary payment plan once the case is confirmed. The circumstance I am referring to is a default order providing for repayment of past due obligations through the Chapter 13.

In the case of Valory Denise Ray, the Unites States Trustee moved for disgorgement of fees earned by debtor’s attorney. The fees in question were those earned during a 722 redemption process whereby the redemption company paid a portion of the loan amount as attorney’s fees. The United States Trustee asserted that a conflict of interest existed in that the funds were borrowed from a third party lender. The United States Trustee also asserted that the amount of the fees was excessive.