Latest News 2012 July San Bernardino Becomes Third California City to File for Bankruptcy

San Bernardino Becomes Third California City to File for Bankruptcy

Many say that California is a bankrupt state, and the constant string of large cities filing for bankruptcy may prove that point. San Bernardino will be the first California city to file for bankruptcy this year, and fears that they may not even be able to cover the payroll for city workers this month.

According to reports in The New York Times, the city is faced with a budget shortfall of $45 million. The city coffers are empty, and the City Council members finally admitted that they had no choice. They chose to file on Tuesday. The interim city manager, Mr. Travis Miller, says that the organization needs major restructuring if they are going to pull through the next few months.

The city will not be prepared to file their paperwork for at least 30 days, and in that time the council members are trying to determine how to make ends meet. The city will need to hire a third-party mediator to aid in the filing, according to a new law passed in the state this year. They will be filing for a Chapter 9 bankruptcy. If they declare fiscal emergency, then the city may be able to bypass the mediator obligation. This highly-paid mediator would work with employee unions and creditors before the council was able to file.

Observers detect that the city will declare a fiscal emergency. San Bernardino has a 15 percent unemployment rate and the highest foreclosure rate in the state. The recession only drove San Bernardino into a more difficult position. Pension plans rose in the city while funds dwindled. Once the city cut redevelopment in an effort to close the budget deficit it was the straw that broke the camel’s back. If you are deep in debt, then maybe a personal bankruptcy is right for you. Talk to a bankruptcy attorney if you need more information.