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So If States Have the POWER to File Bankruptcy, They WON'T File Bankruptcy?

By Joseph McDaniel, Esq.

Here is an interesting article that makes the argument that if Congress gives States the power to file bankruptcy, they may use that power to negotiate with creditors, instead of actually filing.

Well, that happens with individuals, also. But it only takes one creditor with a bad attitude to push a consumer into a bankruptcy, if that creditor is big enough.

I wonder if any of the creditors of the States have bad attitudes.

p.s. there is a remarkably simple solution for the States: tell their creditors the truth. They over-promised voters in every possible category, and now they can't make good on their crazy promises. So now they can simply tar and feather the politicians who, in effect, overused the credit cards belonging to the States, make those politicians wear the Cone of Shame, and tell their creditors what they WILL pay them.

If they play open the kimono, creditors should get it that they can either accept the reduced amounts of goodies, or take...less.

A State has a heck of a lot of leverage, even without a bankruptcy.

p.p.s. Didn't Florida do something a little like that? I'm not certain; since I'm a bankruptcy attorney in Arizona, I don't get out of the office much anymore!

Full post as published by Arizona Bankruptcy Attorney Blog on January 25, 2011 (boomark / email).