While we often hear of people or companies running out of money and filing for bankruptcy, it is not unheard of that entire cities experience the very same things. Sadly, this may be the case for the city of Detroit, Michigan, who claims that they are essentially running out of money, and if they go any more broke than they already are they may be facing the possibility of having to file their city under bankruptcy. When a city is dealing with debt, which trickles down into the people; a financial crisis means that the people not get paid, and in turn may have to file for bankruptcy as well. This cycle is vicious and never ending one.

Not only will current employees lose their chance of receiving their payments, but people who are currently relying on pension plans may lose their funds, and real estate will in turn be affected as well. Kevin Orr, the city's emergency manager, claims that at this point they have zero funds, and are completely incapable of paying off the loans to the creditors. At this time they are doing whatever negotiations they can in order to hold off on filing for bankruptcy as a city, though there is a very real possibility his will occur.

Orr claims that bankruptcy will be the only option they have on order to get out of debt if they can't make new deals with the creditors. At this point, Orr shares that their city has the funds to complete the payroll throughout the rest of the year, and then after that their cash flow will be depleted. Even with that, in order to reach the end of the year goal, he says that some other payments have been deferred or are otherwise not being paid in order to make sure the people receive their wages.

This is not the first time their city has dealt with debt; just last year in March 2012, they borrowed a total of $80 million from the Bank of America in order to get their city out of the pits. Unfortunately, their situation has not changed at all since that year, which means the possibility of city-wide bankruptcy is even more likely now. One financial advisor states that Orr's focus needs to be on paying the creditors' at least the bills that are due monthly now (current goods and services), and once that is done, the creditors are far more likely to work out a deal in order to help you (or a city in this case) back on your feet with the money you owe from the past.

According to Orr, the city has had a long standing history of poor financial decisions that were either "dysfunctional or wasteful" despite the budgeting and various restrictions that were made regarding the cities spending practices. He shares that their city is guilty of using outdated financial practices and policies as well as old and seemingly ineffective procedures and systems in order to protect the cities spending; one that keeps up with the changes in government practices of the current years. Orr claims that a property running city includes one that saves and spends more wisely in order to promote a better economy with stronger customer service as well as the use of private investment and resident returns.

While it may take a city a lot more to pick up its bootstraps and get its way out of debt, the process for an individual struggling with finances may be a little more simple. If you realize that repaying your debt is out of the question, contact a bankruptcy attorney in your area today to discuss the options available to you!