Bankruptcy is a common solution for consumers, and more than a million spouses and unmarried individuals sought bankruptcy protection under Chapter 7 and Chapter 13 in 2010. Small business owners frequently use Chapter 11 to reorganize an enterprise and emerge from a difficult stretch, and the recent massive bankruptcies of U.S. automakers were headline news. In troubled economic times, some American municipal bodies reach a point where Chapter 9 bankruptcy becomes necessary.
But no provision exists to allow individual American states to declare bankruptcy. Some policymakers have begun to advocate for allowing U.S. states to declare bankruptcy as a way to revisit long-term obligations such as pensions and health coverage and provide leverage against unions and bondholders.
The Chair of the House Judiciary Committee recently held hearings on the idea. While the collective budget deficit of U.S. states is predicted to exceed $120 billion in the coming fiscal year, the prospect of state bankruptcy provisions was met with little enthusiasm in Washington. Comments ranged from “a solution in search of a problem” to “useless” and “disruptive.”
For Consumers and Small Businesses, Bankruptcy Is a Time-Honored Debt Relief Solution
As daunting as the idea of a large government bankruptcy may seem, a massive corporate bankruptcy involving a company like General Motors can itself involve tremendous complexities. Business bankruptcy and consumer bankruptcy under Chapter 7 and Chapter 13 also require exacting attention to detail, backed by a close understanding of the client’s goals.
A small business owner can explore the potential for a second chance by seeking to retain control as a debtor-in-possession. By enlisting the help of an Arizona bankruptcy attorney to prepare a reorganization plan, an owner may be able to avoid liquidation and keep a sound idea going and valued employees working.
Consumers who want to consider bankruptcy among a range of debt relief options can learn a great deal in an initial consultation with a bankruptcy lawyer. Whether unexpected medical bills, job loss or an unmanageable mortgage caused the hardship behind a family’s predicament, powerful tools are available, ranging from complete discharge of unsecured debts and exemption of important assets to the automatic stay.
While it looks like states will not soon if ever be allowed to declare bankruptcy, an Arizona debt relief law firm may be able to help you stay in your home, stop creditor harassment and restore your financial stability.