Many people dread suffering from bankruptcy. But although this is the case, their habit or carelessness most often lead them to this path. The same is true with cities. In the U.S. alone, many towns, counties and metropolitan areas have filed for bankruptcy in the past and in recent years and quite a number of them are still recovering.
On the part of a private individual, being broke means facing huge debts and not having the immediate finances to settle them. Cities go through the same situation although the causes differ greatly.
What Happens When a City Goes Broke?
A city is likely to file for Chapter 9 of the federal bankruptcy code when it has depleted its funds and is having difficulty finding financial resources and settling its debts. The act aims to seek protection from the creditors and assistance on how to best settle its financial obligations.