Job Loss Hits Hard After DOGE Tsunami: What Former Federal Workers and Contractors Need to Know About Protecting Their Financial Future

The Department of Government Efficiency (DOGE) was created at the beginning of President Trump’s second term with much fanfare. It was intended to cut the size and expense of the Federal government. But after a rapid start, the department was quietly disbanded in late November, eight months before its charter ended.

A Sudden Wave of Layoffs

The DOGE cutbacks in federal government operations have led to mass layoffs of both federal employees and contractors, with estimates ranging from tens of thousands of federal workers to over a million contractors losing jobs. These losses have triggered widespread economic hardship.

Economists forecast that up to 200,000 federal workers could be cut in 2025, representing 2.5% of jobs in Washington, D.C. alone. Thousands have already exited payrolls as deferred resignations and firings took effect. At least 1 million contractor employees have faced lost paychecks due to funding lapses and canceled contracts. The numbers are stunning and the impact on those affected is nearly immeasurable.

To make matters worse, DOGE-driven reductions eliminated $183 million in workforce development funding, including $75 million from the Dislocated Worker National Reserve. This means fewer resources are available compared to past years.

Job Loss Is One of the Top Triggers of Bankruptcy

Studies have shown that job loss is one of the top five causes leading to people filing for bankruptcy. At the Van Horn Law Group we have learned that more often than not, the circumstances leading to bankruptcy filings are beyond the control of the people affected. 

The federal employees and contractors affected by DOGE layoffs are no exception. They did nothing wrong. Yet many are now facing:

• Missed mortgage or rent payments
  
• Mounting credit card balances
  
• Car loan delinquencies
  
• Difficulty keeping up with everyday expenses
  
• Phone calls from aggressive creditors

Resources That Can Help

Federal workers or contractors who are now facing severe financial consequences stemming from job loss caused by DOGE firings and cutbacks do not have to face the consequences alone. 

There are existing safety net programs workers may turn to for some relief including: Low Income Home Energy Assistance Program (LIHEAP); Unemployment Insurance (UI); Trade Adjustment Assistance (TAA); and Workforce Innovation and Opportunity Act (WIOA). These programs and others may offer some relief and present opportunities for new jobs and career paths.

However, the social safety net programs may not be enough to aid in a timely manner to prevent more severe consequences like mortgage foreclosure, eviction or vehicle repossession. 

When You’re Out of Options, Bankruptcy Can Offer Stability and a True Fresh Start

If you or someone you know is struggling financially after losing a federal or contractor job due to DOGE reductions, you don’t have to navigate this alone. Bankruptcy puts a halt on aggressive debt collectors and other processes that threaten to leave people homeless and without the means to get to work and rebuild their lives. For many, bankruptcy wipes the slate clean and provides workers the opportunity for a fresh start.

If the DOGE layoffs have left you facing financial hardship, Van Horn Law Group is here to help you understand your options, protect your assets, and reclaim your future.

Call Van Horn Law Group today to schedule a free consultation and take your first step toward a fresh start!