Since the Great Recession, cities that faced bankruptcy (though small in number) include Detroit and San Bernardino, Calif. When a city or municipality files for bankruptcy, it does so under Chapter 9. Individuals, by comparison, generally file under Chapter 7 or Chapter 13. The result, however, is the same: the city or individual gets out from under financial distress.
So might it be with East Cleveland.
East Cleveland heads toward municipal bankruptcy
According to Eric Sandy with Scene News, East Cleveland seeks bankruptcy, and Mayor Gary Norton is currently waiting for the State Tax Commissioner’s approval to move ahead with it.
As Sandy reports, Mayor Norton wrote, “Despite the city’s best efforts, East Cleveland is insolvent. Based on financial appropriations for the years 2016, 2017, 2018, and 2019, the city will be unable to sustain basic fire, police, EMS or rubbish collection service.”
It’s a problem when you can no longer afford first responders.
‘Despite the city’s best efforts’
Mayor Norton’s phrase is revealing: “Despite the city’s best efforts…” In other words, you can put forward great effort, and yet still face great financial distress. That goes for individuals and families in the state of Ohio as much as it goes for East Cleveland.
As Sandy points out, no city in Ohio has ever declared bankruptcy, but that is certainly not the case for many thousands of people in this state.
More than 28,000 Chapter 7 bankruptcies in Ohio
Through the end of March 31 this year (over the last 12 months), 28,567 Chapter 7 cases were filed in Ohio. What does this mean? If you’re facing financial distress – like East Cleveland – you’re not alone.