Many people depend on local governments and municipalities for services that seem so basic it is hard to imagine life without them. Though construction during the summertime can lead to longer commutes and frustrated commuters, fixing the roads is something citizens expect to be done. The same holds true for police officers protecting the streets and the postal work delivering the mail. But what if one day those services had to stop?
This is the dangerous and frightening possibility that Jefferson County in Alabama is facing while it struggles with a bout of bankruptcy. Recently, the county has been struggling with the legal, financial and logistical challenges that accompany a government entity running out of money. They have employed several legal experts during the process of resolving their issue, and told the courts that they are coming close to a plan that will help them exit bankruptcy.
Though different from the bankruptcy of a municipality, which occurs under Chapter 9 of the Bankruptcy Code, personal bankrupt can also lead to upheavals and re-evaluations. Bankruptcy offers many options to help people regain financial stability. Filing for Chapter 13 bankruptcy, for example, is just one option that allows people to pay down their debt in monthly manageable payments.
In a Chapter 13 bankruptcy, a person does not need to sell all of their current assets to file. Instead, a plan is set up with payments that are commensurate with the bankrupt person's income. This allows people to gradually pay off what they owe while keeping certain assets.
Unfortunately for Jefferson County, their bankruptcy situation is a bit more complex. But it appears that light remains at the end of this tunnel for Jefferson County.
Source: Bloomberg Businessweek, "Alabama's Jefferson County Debt Accord 'Close, Court Told," Steven Church, May 9, 2013