Detroit Filing Bankruptcy?



I love Detroit.  Always have. And it is on the edge of filing bankruptcy.

Cities cannot file Chapter 7 bankruptcy, and go out of existence.  They cannot file Chapter 11 or Chapter 12

or Chapter 13 bankruptcy payment plans.

They can file Chapter 9 bankruptcy, and more do every month since Stockton, California filed its Chapter 9 bankruptcy case last summer.

Stockton has a ton of pension liabilities.  Some Detroit municipal employee pensions are 108% of the employee’s salary.  Huh?

I would argue plenty of politicians are worth more out of office, doing nothing, than they are in office.  Like my state representative, who has 8 criminal convictions.

But, I digress.

Back to the city I still own property in, and maintained an office in for over 20 years, and still frequent without fear.

Why is Detroit bankrupt?

The example I use, from our Democrat state treasurer, appointed by our Republican governor, stating that Detroit Democrat mayor  David Bing could not get anywhere with the city unions.

Guess how many full time employees the City of Detroit has, just to do payroll, for the City Police Department?


Sixty five full time employees.

Who will not agree to cost saving measures that put them out of a job.

How many does the city need?

Zip.  Zero.  Nada.

A bank will do the payroll for nothing if you use that bank.


It is one thing to overspend your own money, and some people end up in my office for that reason.  And they go through Chapter 7 liquidation, which has some consequences for them; they might have non-exempt assets they lose, it is on your credit report.  The main negative consequence is how they feel, like failures, for not living up to their obligations.

But the Detroit political class promised taxpayer money, not theirs, to dozens of different unions.  Hey, it is the American way to grab for the gusto, the unions got what they could get.

And more.  The money is not there, and will not be, for the city of Detroit.  And neither the state of Michigan nor the federal government has the money to cover all the debt.

So, when your assets cannot cover your debts, and your income cannot pay your expenses, you are bankrupt, right?

Well, not yet, officially.  The emergency financial manager appointed by the governor is trying to straighten things out.

The other Michigan politicians do not want them to file, because they believe their bond ratings would suffer and it would cost their governmental units more money.  (which they could not spend on other stuff)

If any entity needs the fresh start provided by bankruptcy, it is my home town.

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