Recently, two fairly large cities in California filed for bankruptcy protection. The city of Stockton (a city of 292,000 people) filed for bankruptcy protection in late June. In early July, the city of San Bernadino declared a fiscal emergency and filed for bankruptcy. Here is an article about the filings:
A few years ago, another California city, Vallejo filed for Chapter 9 bankruptcy protection. This process allowed Vallejo officials to negotiate with their creditors so that the city could get their financial house in order. Orby Davis, then Vallejo mayor, when asked if filing for bankruptcy was worth it stated “That question suggests we had an option. It was filing bankruptcy or not existing as a city any more.” National Public Radio recently featured a conversation with former interim Vallejo city manager Phil Batchelor talked about what happens to workers and services when a city goes bankrupt. (listen to the conversation here).
Bankruptcy is not only a tool to eliminate debt, but also can be used to renegotiate your debts to obtain a lower interest rate, catch up on past due mortgages, and completely remove second and third mortgage liens on your home. Many times people do not desire to get out of all their debt- but just make it a little easier to handle. Many individuals and families situations are not all that different from the City of San Bernadino. You certainly would like to pay your debts- they just need to be a little easier and more realistic if you are ever going to get back on your feet again.
At our firm, we specialize in Chapter 13 and Chapter 7 bankruptcy and offer free consultations to see if it is right for you. What do you have to lose?