News / Law
San Bernardino Becomes Third California City to Declare Bankruptcy
California cities are struggling; plagued with foreclosures and dwindling tax revenues, forcing numerous municipalities to take drastic measures such as bankruptcy to solve their cash flow problems.
First there was Stockton, then Mammoth Lakes now San Bernardino becomes the third California city to declare bankruptcy in a month’s time.
The San Bernardino City Council voted Tuesday to enter Chapter 9 bankruptcy in the face of a $45 million budget shortfall. The city is so broke that they will not be able to pay public employees beyond August 15th.
The cities insolvency is due in part to accounting errors, deficit spending, pension and debt costs, and a lack of revenue growth.
Chapter 9 which is reserved for municipalities will allow San Bernardino to suspend payments to creditors while it works on plan to balance its budget with its revenue.
Although personal and business bankruptcies are on the decline, many cities across the country are facing budget gaps.
There is a great deal of stigma attached to bankruptcy, but for some entities it is their only option to return to solvency. Bankruptcy attorneys can detail the different filings and advise a business or individual on which debt relief plan will be their most viable option. An expert bankruptcy lawyer will outline the pros and cons so you can make an informed decision.
Individuals can chose from Chapter 7 or Chapter 13 debt protection. Each of these plans has different requirements. If you decide to enter a debt protection plan your bankruptcy lawyer will be at your side during the whole process.
