photo #7013854

If a City or state Files Bankruptcy, they may file for bankruptcy, which can change the structure of their debt obligations.Municipal bankruptcies can affect the pension funds and pension obligations of the city or state in question. Although cities are legally obligated to pay retirees their pensions, in the event of bankruptcy, there is precedent for cutting pension payments in favor of paying out to bondholders, and cities can stop pension payments while the bankruptcy case is in progress. The previous example of Central Falls in Rhode Island illustrates this phenomenon, and Detroit may be next. Or pension can and will be renegotiated in bankruptcy court. https://www.mercatus.org/research/research-papers/state-fiscal-rankings-2018-edition