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Illinois Might be the First State too for File Bankruptcy Since 1933


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6/21/2017
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explaistAccording to a recent report by The Trumpet, Illinois has been operating without a budget plan for the past 700 days. Bills for the state have been increasing and bankruptcy might be the only solution for Illinois.

Temporary measures have been taken to stop Illinois from going under, but their deficit continues to rise. The state is currently in $14.7 billion in debt, which totals in 40% of the state's operating budget. No one is sure when or how this massive debt will be paid off.

Republican Governor, Bruce Rauner, is pushing for a balanced budget, but according to The Tempest, the Democratic-led legislature is pushing for more government spending. The latest budget proposal suggested a $7 billion deficit, and it was scrapped by the Senate when the governor attempted to veto it.

Illinois' money issues began in 2011 with a $12 billion debt which caused a major tax increase in an attempt to pay off the enormous deficit.

The state-funded programs and agencies might soon go under if the state does not find a solution. Policemen, hospital workers, and school teachers are just a few of the people who may experience cutbacks.

 Illinois is likely going to have to file for bankruptcy; however, the Fiscal Times  explains there is no bankruptcy protection for states. 

"Unlike city and county governments, states cannot legally declare bankruptcy as a means of shedding debt by shedding debt by forcing creditors, bondholders, and government retirees to absorb some of the loss. The last time a state declared bankruptcy was in 1933, in the throes of the Great Depression, when Arkansas defaulted on its debts.

But some legal scholars and government experts have argued in recent years that a well-orchestrated bankruptcy might be a far better solution than a federal or taxpayer bailout, and it would likely protect pension programs and health insurance draconian cuts..."

Even though many people believe having a state filing for bankruptcy is a bit extreme, it may be the only answer for Illinois.



Category: Bankruptcy Attorneys


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