How does a city function under the threat of bankruptcy and what happens when cities file bankruptcy?
What Happens When Cities File Bankruptcy?
Vallejo, Calif., Central Falls, R.I.; Harrisburg, Pa.; Boise County, Idaho, and Jefferson County, Ala., have all filed bankruptcy or will declare bankruptcy soon.
In their situations, budget cuts happen first closing fire houses and thinning the ranks of police. Abandoned and foreclosed homes pockmarked neighborhoods force businesses to leave. Next taxpayers go and the prostitutes and drug-sellers move in. This is what happened in Vallejo, California.
Few cities get so desperate as to seek bankruptcy protection. Since 1937, when Chapter 9 bankruptcy filings first became an option for municipalities, there have been only 625 filings according to ABC News. Only five communities this year have filed for bankruptcy. Six filed in 2010.
Jefferson County, Alabama, was hit hard too. The county can’t afford to make repairs to its aging bridges so for safety, school busses must go around them, racking up 1,722 miles in detours at an added cost of $2.5 million a year, according to Bloomberg.
Companies run out of money and stop paying taxes. Tax payers leave. With increasing insurance costs and constant need for city services, cities go into debt. When their credit lines run out, the city files for bankruptcy.
Consult with Lanigan and Lanigan on Florida Bankruptcy
If bankruptcy is filed by cities in hard times so you shouldn’t feel guilty. A tough Florida economy has made it nearly impossible for families, businesses and individuals to recover .
Meet with Winter Park bankruptcy attorney Eric Lanigan and Roddy Lanigan of Lanigan and Lanigan, P.L., to find out what can be done to help you iron out your financial challenges without losing everything.