Recently, press has been pointing at California because of the many the Chapter 9 city bankruptcies that are going on there. Yet a recent article by the Bloomberg BusinessWeek alleges that Nebraska is actually the state with the most Chapter 9 filings in history. According to the article, Nebraska is home to about one-fifth of the nation’s city bankruptcies which have been filed since 1981. While California has more cities and more people who can declare bankruptcy, Nebraska still comes in as the most bankrupt state in the US. California takes second, with Texas and Alabama close behind in third and fourth.
In Nebraska, the government deals with bankruptcies differently. No town, city, or county has sought court protection in the state. Instead, all of Nebraska’s 45 Chapter 9 filings were cases that had to do with special tax districts. Most of these districts were owned by a residential subdivision developer. The developers used the property-tax to pay for streets, sewers, and other city expenses that would normally come out of the city funds. This is why California is often hailed the Queen of Chapter 9 bankruptcies, though Nebraska could clearly dethrone her.
The Chapter 9 is a helpful way to protect taxpayers and treat creditors with fairness. According to a land-use attorney in Omaha, Nebraska, many of the special-tax district owners are vulnerable to bankruptcy, especially when the housing sales drop significantly. Shockingly, only five states are responsible for over half of all Chapter 9 bankruptcies in the USA. The afore-mentioned California, Texas, Nebraska, and Alabama are joined by Oklahoma when compiling this statistic.
While city bankruptcies are sobering, they are less common than Chapter 11 bankruptcies, which have capsizes 20,000 companies across America.
Chapter 9 bankruptcies are only used by the local governments and entities when they want to seek protection from creditors. If you need to file for bankruptcy her in Texas, talk to an attorney at the Malaise Law Firm for aid. We will help you to get back on your feet financially and out from under the debt that has become such a burden in your life.