Black Graphic T wrote:
You assume that they'll be something akin to Chapter 11 or Chapter 9. I feel like if a State goes Bankrupt, it's gonna end up going full on Chapter 7.
I assume it is based on Chapter 9 specifically, because Chapter 9 specifically deals with municipalities, Chapter 7 with individuals, and Chapter 11 (which is what I did) was is a restructuring – which is similar to Chapter 9. As of right now there are no provisions for an entire State to go bankrupt. The closest thing we do have is Chapter 9
The other examples we have is when a country goes bankrupt, but in reality – the country doesn't cease to be. The government doesn't cease to exist. Services are still provided, it's just in severe austerity as it cannot get any new debt, and the debt it would get if it could would have a high interest. Greece is an example, it needed to be bailed out – but this is kind of been Greece's problem for over a century and a half, a cycle of perpetual European debt.
If anything the budget of the State would probably have to be restructured in such a way where less essential services, and programs, would be cut first. After all, the blame is still ultimately on the politician and legislature that created the problem – even though the people certainly have a far greater role in being the blame.