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Without the possibility of bankruptcy, a state can experience the debt overhang problem, where large existing debt burdens deter any additional lending to the state, driving out capital. [7] The state's ability to tax and collect revenue is not unlimited; residents can simply move away if the tax is too high. [11]
No state has ever declared bankruptcy, though. As state and local governments have shut down businesses to prevent the spread of COVID-19, they have also ended much of the consumer activity that ...
The first municipal bankruptcy legislation was enacted in 1934 during the Great Depression. [2] Although Congress attempted to draft the legislation so as not to interfere with the sovereign powers of the states guaranteed by the Tenth Amendment to the Constitution, the Supreme Court held the 1934 Act unconstitutional as an improper interference with the sovereignty of the states. [2]
Originally, bankruptcy in the United States, as nearly all matters directly concerning individual citizens, was a subject of state law. However, there were several short-lived federal bankruptcy laws before the Act of 1898: the Bankruptcy Act of 1800, [3] which was repealed in 1803; the Act of 1841, [4] which was repealed in 1843; and the Act of 1867, [5] which was amended in 1874 [6] and ...
I can pay $0.10 on the dollar (it's a good idea to start low), if that doesn't work, we will very likely have to file Chapter 7 bankruptcy." Then you negotiate.
Missing a Chapter 13 bankruptcy payment can jeopardize the process. However, many trustees understand that financial difficulties can get in the way and are willing to work out an arrangement to ...
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