A federal judge has recently ruled that the City of Stockton, California will be permitted to move forward with its bankruptcy case and, consequently, to reorganize the city’s debts. While this ruling has come to the dismay of the city’s many creditors, who feel that the city should be forced to try to come up with more money to pay its debts, others across the nation are closely watching this bankruptcy case, as it could set a number of precedents for future U.S. cities to file for bankruptcy. Perhaps even more groundbreaking is the fact that, with the judge’s ruling, Stockton has become the largest U.S. city to hit financial rock bottom and file for Chapter 9 bankruptcy.
As the Stockton bankruptcy case progresses, one of the key trend-setting legal precedents that is expected to come to fruition is whether Federal U.S. bankruptcy laws will trump state law (in this case, California State law) or vice versa. Specifically, one of the major controversies creditors have pointed out in this case is the fact that Stockton continues to pay into the state’s pension plan, as mandated by state law; creditors, however, see this move as Stockton elevating state law over federal law, as creditors have demanded that Stockton decrease its pension funding to pay off the city’s debts.
As the case trudges on, one thing is clear about this bankruptcy case – municipalities seem to be just as much at risk of becoming overburdened and overwhelmed by debt as individuals in this persisting recession. If you are facing seemingly insurmountable debt and are looking for a financial fresh start, contact the trusted Colorado debt relief and bankruptcy lawyers at the Law Office of Jon B. Clarke, P.C.
Our experienced legal professionals are committed to providing each of our Clients with the debt relief assistance they need, and we will work tirelessly to ensure that our Clients’ cases are resolved as favorably and efficiently as possible. For a thorough assessment of your situation, along with expert advice regarding the best manner in which to move forward to unburden yourself from debt, call us at (866) 916-3950.