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Financial crisis can be a problem that is faced by not just individuals but also municipalities. Getting their finances in order might require some assistance. According to Dallas based bankruptcy law firm Recovery Law Group Chapter 9 bankruptcy is an option available to municipalities to get their finances in order by restructuring their debts. On December 3, 2013, a landmark judgment by U.S. Bankruptcy Judge provided respite to Detroit’s claim for protection under Chapter 9 bankruptcy. The city municipality was relieved of $18 billion debt.
According to Judge Steven Rhodes, the filing for bankruptcy and the ruling was constitutional as well as essential. With the bankruptcy filing, Detroit became the largest municipality to become bankrupt in U.S. history. Since there was no possibility of increasing the tax revenues or reducing expenses without causing irreparable damage to health and safety of the residents of the municipality, the only way out to get rid of the humongous debt was bankruptcy. The major issue faced while a municipality is filing for bankruptcy under Chapter 9 is the onus of proving that the negotiations were held in good faith while filing. Since the city’s budget was dire, this couldn’t have taken place.
The decision was not without its controversies as pension cuts were advisable in a fair manner. This was going to affect Detroit’s policemen, firefighters, and public workers. However, the emergency manager was responsible to do so without being unjust or unfair to government workers. The case is a milestone as it sets precedence for other cities to file for bankruptcy in order to get rid of unmanageable debts. If you are able to identify with the situation of being unable to manage your debts, you should seek consultation with experienced bankruptcy attorneys by calling 888-297-6023.