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A Brief Guide to the Chapter 9 Bankruptcy Code – What to do if your city files for bankruptcy

Aug 19, 2013 0 comment Tips and Information

Recently, the U.S. economy has experienced even more upheaval with the news of the City of Detroit’s Chapter 9 municipal bankruptcy filing. This has sent shockwaves throughout the nation – it is one thing for an individual or even a corporation to go bankrupt, but an entire city doing so takes financial hardship to a whole new level.

Municipal bankruptcy all too common at the moment and can plunge thousands of jobs, millions of families and countless people’s financial futures into total uncertainty.

What is Chapter 9 Bankruptcy?

It refers to Chapter 9 of the Bankruptcy Code. Chapter 9 deals with Municipalities, while Chapters 11 and 13 deal with business and personal “reorganizations” respectively. In each of these three situations, debtors are granted a reprieve for paying creditors while they “reorganize” their finances to propose and make pledges to restructure their debts.

How common is it?

U.S. congress enacted federal bankruptcy legislation for municipalities in the 1930s. Since then there have been:

Some examples of cities and municipalities that have gone bankrupt recently include:

What does Chapter 9 Bankruptcy mean for consumers?

Reduction of services
Once a city or municipality is bankrupt, it looks to cutting costs and raising revenue. This often means a reduction of services, jobs, wages and hours of work available in areas such as:

Raising of taxes

Another effect is that taxes are raised, putting more pressure on residents to pay higher bills while receiving less services. Outgoings can often exceed income, making short term loans the only way to keep bills paid.

If you live in a struggling city or municipality

Consumers need to prevent themselves from being blindsided by safeguarding their finances and keeping responsible and manageable borrowing habits. Cash advances that are kept up to date, borrowed in emergencies only and repaid on time are the best way to stay out of financial hot water while making the month a little easier.

Balance for better borrowing

The key is balance – borrow enough to live on, but not too much that you cannot pay it back if a financial disaster strikes such as job loss, increases in taxes due to municipal bankruptcy or another kind of emergency.

We can help

PersonalLoansForBadCredit.net can help consumers living in areas that permit payday loans to find responsible and professional online lenders to assist with quickly disbursed payday loans. These lenders understand financial hardship and can often provide financial help when others are unable to, such as for consumers with bad credit or bankruptcy themselves.
Click here to learn more and apply for a bad credit emergency payday loan.


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