In all of the 26 years I’ve been in practice as a debt consolidation lawyer offering bankruptcy services in Indiana, there has never been a provision in our state for a city, town, or for Indiana itself, to file Chapter 9 bankruptcy. If ever the law changed, though, I would like to be involved in the process of municipal bankruptcy. That’s only one of the reasons I was very interested in the article about Detroit: “If Detroit opted for bankruptcy, experts say that wouldn’t encourage others”.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 of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices has been collecting material on municipal bankruptcy for the past five years. In these Bankruptcy in Indiana articles, I’ve covered the story of Vallejo, California, which was, at the time, the nation’s largest city to declare bankruptcy. Then I wrote about Stockton, California, even larger, as it filed for bankruptcy protection. San Bernardino, another California town, also filed for bankruptcy.
Individual bankruptcy in Indiana filers would use bankruptcy Chapter 7 or file under Chapter 13 bankruptcy law. The section of the the bankruptcy code that applies to municipalities is Chapter 9. The concept is the same – offering a chance for debtors to make a fresh financial start.
The website governing.com lists the number of municipal bankruptcy filings as thirty three so far. The concern about Detroit filing bankruptcy is that it might “become a model for others to follow”. Jack Dorer of Moody’s Investor Services doesn’t think so. He says Detroit’s situation is unique because of the auto industry. Analysts are making note of the fact that other big cities, including New York City, Cleveland, and Philadelphia, have renegotiated their debt without filing bankruptcy.
Now, as I mentioned, we’ve never experienced a municipal bankruptcy in Indiana.
However, there’s a lesson here for individual debtors. Don’t wait until the situation is absolutely desperate, with creditors threatening lawsuits and collection agencies making your life miserable. As debt management professionals, we lawyers for bankruptcy can sometimes help debtors negotiate with their creditors and possibly avoid filing personal bankruptcy in Indiana!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg