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Detroit Faces Financial Woes

Detroit Faces Financial Woes

Posted By Detroit Bankruptcy Attorney || 30-May-2012

There are few who would disagree with someone who said that Detroit's government needs to become more efficient at spending money. The city is struggling to stay afloat financially while trying to move into the 21st century with their IT systems, and just agreed to hire a new CFO and program manager to work on fixing its finances. Detroit has a huge deficit of $200 million and service delivery problem, and many Detroiters agree with the Detroit City Council that something has to be done. One of the key issues at hand is the city's outstanding debts to the state that are threatening the city's ability to borrow funds and receive grant money promised by contract.

Two of the key outstanding debts that are causing trouble for the city are the $4.7 million bill from a broken water main at the state fairgrounds and another $220 million debt in revenue sharing that the city owes the state. There is an ongoing legal dispute over whether or not these contracts, which were made by the city's previous Governor John Engler, are still in effect now that there is a new administration. The spokesman for the Michigan Department of Treasury claims that the state is not in default with the city and has not yet looked into the issue further with other contracts.

The city of Detroit has a below-investment-grade rating and reports say that the city is in a state of "severe financial crisis". Michigan signed a law in March 2011 allowing the state to take financial control of any municipality facing bankruptcy, but Detroit is trying to avoid having its finances taken over by a state-assigned emergency manager. When a city struggles financially, it can also be tough for the city's residents to stay afloat and financially stable. Those who are considering personal bankruptcy or corporate bankruptcy should enlist the help of a Detroit bankruptcy lawyer who is knowledgeable in bankruptcy law and up-to-date with the financial state of Detroit.

Categories: Bankruptcy

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