Chapter 9 bankruptcy. Rare, but when it happens it can completely alter a local economy. This is what happened when the city of Detroit in Michigan filed for bankruptcy in July 2013, making it the largest city ever to file for bankruptcy. Detroit Governor Rick Snyder described this as a failure “60 years in the making.”
The city, now in billions of dollars of debt, has left many Detroit residents out of work, many wondering if their pensions are safe, and many others outright fleeing to other cities and even other states. But Detroit can’t simply run away from its financial problems even if many of its residents can.
Snyder and other government officials see bankruptcy as the only viable option available to resurrect the city. Minor debt restructuring strategies are simply not enough at this point. A parallel can be drawn here to individuals or couples who are no longer able to resolve their financial problems with restructuring (Chapter 13) but instead need to seek a total debt discharge (Chapter 7).
Many creditors and others that have a stake in Detroit’s economy are concerned that restructuring plans would cost them, since restructured debt settlements wouldn’t amount to nearly as much as the creditors (and others) are actually due. As this is the largest city/municipality bankruptcy filings in history, many other struggling cities and counties are intently watching Detroit. The outcome of this Chapter 9 proceeding in federal bankruptcy court could speak volumes for future cases of this nature.
Just as Detroit’s bankruptcy didn’t result from a sudden event, bankruptcy whether great or small results from a pattern of either poor decisions or adverse events- often both. One principle everyone can stand to take away from Detroit’s bankruptcy filing is that a pattern of poor financial decisions will have consequences eventually.
At Malaise Law Firm, we understand that many of your financial struggles may have been outside of your control. Maybe you were laid off, maybe you had unforeseen medical bills. Whatever the case, our team of San Antonio bankruptcy attorneys are here to ensure that you find a solution to your debt. If your debt is consuming you, take action today and contact a San Antonio bankruptcy lawyer at our firm for an evaluation of your case.