Although I’ve been watching the news about municipal bankruptcies in other states, in all of the twenty five years I’ve practiced as a debt consolidation lawyer offering bankruptcy services in Indiana, there has never been a provision in our state for a city or town, much less the state, to file Chapter 9 bankruptcy.
As I was explaining to one of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices, one of the reasons I’m interested is that I would like to be involved in the process if ever our law changed and allowed municipal bankruptcy. More important, though, is that writing about bankruptcy in other states allows me to help readers better understand
how the bankruptcy process works in general
how filing small business bankruptcy in Indiana can bring financial relief and allow some businesses to rebuild.
One city whose story I’ve been sharing over the past few years is Vallejo, California, which became the nation’s largest city to declare bankruptcy. A recent headline declared “Vallejo begins to recover from bankruptcy”. Let’s look behind the scenes: municipal bankruptcy forced Vallejo to create a more realistic budget and to learn to live within that budget. Some public projects needed to be postponed and some services needed to be cut. But, just as happens with bankruptcy Chapter 7 in Indiana, or with folks filing personal bankruptcy in Indiana under Chapter 13 bankruptcy law, Vallejo’s new way of managing finances is sustainable.
Just this month, a judge cleared the way for an Alabama county (the one where Birmingham is located) to file municipal bankruptcy. This is even larger than the Vallejo bankruptcy, with the main problem being all the borrowing the county needed to do for its sewer system. Jefferson county, as one of my Columbus bankruptcy lawyer colleagues reminded us, actually filed the bankruptcy back in November, but there were claims that Alabama’s state law did not allow the case to be filed. The lesson here that I want to emphasize is that the reason the judge approved the bankruptcy is that “Jefferson County is insolvent and negotiated in good faith to repay its debts.”
In the case of Jefferson County, the problems stemmed from a mix of outdated sewer pipes and a bad economy. When it comes to personal bankruptcy in Indiana, it’s typically a mix of factors such as job loss, divorce, and medical costs. That statement is true whether people are filing bankruptcy Chapter 7 in Indiana, filing individual bankruptcy under Chapter 13 bankruptcy law, or filing small businss bankruptcy in Indiana.
As sure as my name is Mark Zuckerberg, the purpose of bankruptcy law in general is to help honest debtors (who’ve tried everything they can to keep repaying what they owe but whose circumstances simply don’t allow them to catch up) to have the chance for a fresh financial start.
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg