Municipal Bankruptcy State Laws
Federal law allows all local governments to seek bankruptcy protection given a filing is permitted under state law.
States impose a range of restrictions and qualifying criteria for municipalities attempting to file for Chapter 9, with only about half having laws specifically authorizing municipalities to file. In Oregon, for example, only irrigation and drainage districts can file for bankruptcy. Montana allows for most municipalities to file for Chapter 9, with the exception of counties.
Other state statutes are without rules governing Chapter 9 filings. Georgia municipalities are explicitly prohibited from seeking bankruptcy protection.
Law firm Chapman and Cutler, LLP, reviewed all state laws, grouping them into categories described below. Click the map to view laws and the number of local governments for each state.
||State specifically authorizes Chapter 9 filings|
||Chapter 9 filing is authorized upon conditions met and further action of state, officials or other entity|
||Municipalities have limited authorization (click for details)|
||No Chapter 9 authorization outlined, laws are unclear or filing otherwise prohibited|
Note: Please zoom out to view Alaska and Hawaii. State policy classifications obtained from "Primer on Municipal Debt Adjustment," Chapman and Cutler LLP. Number of Governments measured in 2012 Census of Governments