It’s one thing to have few people within your city struggling with debt and bankruptcy, yet it’s another thing entirely when the entire city itself is struggling so much that they are forced to file for bankruptcy. According to one resident of the city, he was once a happy individual who was a gardener at the local park. Today he sits in a wheelchair without a job because of his knee injury and then stroke which forced him into early retirement. This man shares of the many memories of a town that was once beautiful and is now being destroyed by corrupt politicians causing many people to move out. According to his testimony, he is living off of pension that is one-third paid for by the city and due to his legal contract, he claims that he has no need to worried about the bankruptcy that the city of Detroit is facing—though he actually should be.

The city of Detroit, Michigan filed for a Chapter 9 bankruptcy on July 18, 2013 which means that they are seeking to protect themselves from creditors who are trying to receive the money that the city owes them. In most cases those that will file for Chapter 9 will include cities or countries, townships and school districts municipalities. However, what this 50 year old citizen does not realize, is that by the city filing for bankruptcy for protection from creditors, this includes people they owe pension payments to as well. Though his finances will be secure for the next half year or so, there is no guarantee that the city will continue to help him after that. It is believed, as reported by Kevyn Orr, the emergency manager who was appointed by Michigan’s governor, that not only will pension be effected, but likely health care plans as well.

Reports share that they are deep in the pits of debt at this time, and it is very likely that the people will suffer from it, if they aren’t already. As seen in history thus far, Detroit is the largest city in the county to file for bankruptcy owing an estimated $18.2 billion in long term debt as well as another $9.2 million for retirement benefits that remain unfunded. To look at the debt in simpler terms, the city on estimate owes each resident $27,000. One of the primary causes of such debt is that every year since 2008, Detroit has gone over budget by at least $100 million or more than what they were able to bring in through revenue. Because of this, the state is suffering. With a shrinking population, their economy has become nothing short of feeble.

It is believed that the economic problems in the city have been brewing for quite some time, starting about fifty years ago. Back then, Detroit was the hub for sending out American made cars including Ford, GM and Chrysler, making the city rich as it housed over 1.8 million residents on the Michigan Island. However, that number has dropped drastically down to only 700,000; the majority of the people being poorly educated and currently suffering from their own financial hardships. A lot of the concern with the market revolves around the success of Detroit’s Big Three, and their difficulty in competing with foreign made cars. Despite this fact, the Motown city is believed to have made plenty of their own mistakes which have led to the extremely financial crisis. Jennifer Bradly with the Brookings Institute, she claims that the cities mistakes were made at every level, with debt being raked up by the leaders knowing that their population could never pay it off as it kept diminishing.

As a result of the debt, the taxes raised and services of the city were entirely cut off, making people less likely to want to live there. Detroit essentially kicked out their residents with how they ran their city. As a result, there are only 30 percent of the residents who actually have stayed in the city for employment, the remainder will commute out on a daily basis to a more stable city economy. Because of the reputation of the city, neither state nor the federal government have offered an opt-out for Detroit through bankruptcy, and it is now up to Mr. Orr to essentially save the city. Orr believes that if they can invest $1.23 billion back into restoring firefighters and policeman and other city services back into the town there is a chance that they can save it. Only time will tell.

For more information on your own personal filing for bankruptcy, contact a lawyer today!