Debt Settlement Likely As State Bankruptcy Unlikely To Be Allowed
Print View - Published: Fri, 4 Feb 2011 at 8:31 PM
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There has been speculation that U.S. states might be permitted to declare bankruptcy due to spending budget issues. Debt consolidation plans are far more likely. Top Republican legislators among others who refuse to legislate routes to state bankruptcy, though it has been discussed. There also will not likely be another bailout for state governments either. Our government has taken out enough personal loans already.
State bankruptcy more unlikely than debt consolidation procedures
Most U.S. states, if not all, have encountered some sort of spending budget shortfall since the recession started in 2008. Fewer individuals employed -- and therefore purchasing goods and services -- combined with a sluggish housing market has exacerbated state budgetary woes. State bankruptcies are on the table for several though. Several Republicans are very against this taking place though. There were debt settlement options for instance spending cuts which were pointed out by House Majority Leader Eric Cantor rather than simply going to a bankruptcy. The possible outcomes from allowing state bankruptcies could contain the growing municipal bond industry collapsing. There will not be any more bailout packages either. You are unlikely to get anymore emergency loans back.
Bankruptcy not what state plans on
Some state governors of states with budget woes have insisted that their respective states wouldn't consider bankruptcy. Governors Christine Gregoire (Wash.) and Dave Heineman (Neb.) issued a joint statement to the effect that neither state would file for bankruptcy even if it were made an option legally. The Center on Budget and Policy Priorities explains that 44 states have a spending budget shortfall in the next year. The only states that aren't expected to have any issue are Alabama, Arkansas, AK, Delaware, North Dakota and Wyoming.
The past was the most severe of it
Several feel like the recession is slowly being eased out of. This is what economic forecasts are showing. The possible ramifications for a state government to declare bankruptcy could possibly be catastrophic, and thus the idea is too dangerous for lawmakers to contemplate. There would be years of federal bankruptcy courts going through cases.
Articles cited
Reuters
reuters.com/article/idUSTRE70O66220110125?loomia_ow=t0:s0:a49:g43:r1:c0.272727:b41291400:z0
CBPP
cbpp.org/cms/?fa=view&id=711
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Article resource - Debt settlement plans more likely than state bankruptcy by MoneyBlogNewz.
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