Harrisburg, Pennsylvania Trying to File Bankruptcy
In difficult economic times, it is not just private citizens and businesses that struggle. Some city governments need assistance reorganizing their financial situations. One way of doing that is to file Chapter 9 municipal bankruptcy, a chapter that few people know about. Chapter 9 allows cities to negotiate with creditors while the cities plan a way to manage their finances in the future. Bankruptcy can also be a powerful tool for individuals and businesses that need to reorganize financially, but it is not needed in all cases.
Harrisburg, Pennsylvania is one of the cities who have sought the protections of bankruptcy in 2011. Harrisburg City Council members narrowly approved filing Chapter 9 bankruptcy to deal with the city’s $315 million debt. The city amassed the debt from overhauling its incinerator and ended up having to sell the incinerator as well as cut key services to try to deal with the debt.
However, a bankruptcy judge ruled that the city could not file for bankruptcy due to a change in the law over the summer of 2011. The city is appealing the decision, and in the meantime the state has appointed David Unkovic to act as receiver to try to help Harrisburg reorganize its finances.
Different Forms of Bankruptcy Protection
In addition to bankruptcy for municipalities, bankruptcy offers protection for individuals and businesses. Chapter 7 liquidation bankruptcy is available to both individuals and businesses. In Chapter 7, the trustee will liquidate the debtor’s non-exempt property and determine how to pay off creditors. At the end of the process, the debtor is discharged from personal liability for any debt that remains after the asset liquidation.
Chapter 13 is another option available to individuals. In Chapter 13, debtors work with the trustee and creditors on a three or five year repayment plan. At the end of the repayment plan, the debtors are released from personal liability for any remaining debt. Chapter 13 allows people to keep more of their property than Chapter 7 does, and many people looking to save their homes from foreclosure as well as eliminate other debt such as credit cards or medical bills choose Chapter 13.
Alternatives to Bankruptcy
Bankruptcy is not the most appropriate solution for every situation. In some cases, people are only looking to save their homes from foreclosure, and loan modifications may be what the homeowners need. In other cases, renegotiating the terms of one specific debt or lease is enough to return a person to financial solvency.
If you are struggling financially contact an experienced debt relief lawyer who can discuss your situation with you and advise you of your options.