Today many counties and cities within the United States are filing for bankruptcy because they are unable to repay their large debts and their creditors will not cease collection actions until they are repaid. At the end of 2011, Jefferson County in the state of Alabama filed a Chapter 9 municipal bankruptcy case with claims worth a little over $4 billion, as reported by Thompson Reuters News and Insight in a June 5, 2013 article.
Jefferson County has â€œone of the largest U.S. municipal bankruptcyâ€ cases. A municipality includes, but is not limited to, a city, town or village. Since Jefferson County filed bankruptcy in 2011, the bankruptcy court, which will allow JP Morgan Chase and Company, which is one of its creditors to reduce the debt that the County holds for about $842 million, recently approved a plan. This plan was agreed upon by the Countyâ€™s creditors and since JP Morgan agreed to give up a portion of the debt that it holds it took a haircut. A haircut is when an entity or person agrees to take less than what is owed, therefore, suffering a loss.
Moreover, bond insurers and hedge funds signed a settlement since this is allowed under the Chapter 9 bankruptcy claim. They were owed about close to $2.5 billion dollars by the County, and since there have been settlement agreements between the county and the creditors. The county has reduced its debt to about $2 billion from over $4 billion debt, which it owed.
If you are in debt or if you are behind in your mortgage payments, then bankruptcy may help you. Jayson Lutzky, an attorney with 30 years of experience, offers free in person consultations to help you determine what your options are. To learn more or to set up a consultation, call 718-329-9500. You may also visit Mr. Lutzkyâ€™s Website, www.MyNewYorkCityLawyer.com.