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NACM: Municipal Bankruptcies Growing

July 13, 2012, 07:10 AM
Filed Under: Bankruptcy

A report posted by the National Association of Credit Management says that the Stockton, CA Chapter 9 filing was not alone, as now two more California communities have decided to take the path of municipal bankruptcy.

According to the report, lawmakers in San Bernadino, CA voted Tuesday to pursue a municipal bankruptcy filing, as Stockton did late last month. The vote comes on the heels of Mammoth Lakes' Chapter 9 filing in California just before the Independence Day holiday over problems stemming from a large real-estate-related court settlement and costs/entitlements that have grown out of control for the small resort community.

The report also states that in Scranton, PA, talk of potential bankruptcy as a debt solution is picking up steam. Facing well-publicized financial problems, lawmakers there moved to cut many public employees' pay to minimum wage. This follows the attempted bankruptcy filing by Harrisburg which have been rejected by judges in Pennsylvania courts multiple times, largely on the grounds that the state mandate prohibits the practice, and is, in fact, unconstitutional.

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