Showing posts with label chapter. Show all posts
Showing posts with label chapter. Show all posts
Sunday, November 3, 2013
BANKRUPTCY CHAPTER 9
Bankruptcy is a process through which the financial obligation of a person is eliminated. It helps to restructure the debts or in certain cases eliminates a part of the debt, depending up the type of the bankruptcy a person is filing. But filing bankruptcy is not an easy decision. One has to analyze things very carefully before filling bankruptcy. There are many types of bankruptcy covering individuals and different entities. Chapter 9 is dedicated to municipalities.Chapter 9 bankruptcy laws deals with municipalities who are going through financial turmoil and have huge debts to pay off but are unable to do so. This generally occurs when the budgeting is not controlled properly or if there is any loss due to certain unavoidable circumstances. In this scenario it is advisable to municipalities to file for Chapter 9 bankruptcy.
To file for Chapter 9 bankruptcy a municipality must:
• be insolvent
• be a debtor as per state law or according to a government officer
• opt for a plan to restructure its debts.
Chapter 9 bankruptcy not only covers the affected municipality but also the people living there. It helps the municipality to repay the debts to the creditors and also protects the town. It also encourages the citizen to not to do any harm to their town.
Filing Chapter 9 is the ultimate option left for the municipality. But it is the only available option through which a municipality can turn around, pay off their creditors and to start afresh.
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