Detroit Bankruptcy – Pensions Aren’t Protected From Cuts

Retirees like Gwendolyn Beasley, 67 years old, who worked 34 years for Detroit as a library clerk has an annual pension of $13,085. Ms. Beasley’s pension could be decimated in the very near future.

A judge declared Detroit eligible for bankruptcy and ruled that pensions aren’t protected from potential cuts. Five months after the city filed for Chapter 9 protection, U.S. Bankruptcy Judge Steven Rhodes said Detroit was entitled to reorganize under bankruptcy law, describing his ruling as a “fresh start” for the city.

Judge Rhodes said Detroit’s public pension holders aren’t entitled to special protection from potential cuts – despite a Michigan state constitutional provision aimed at shielding pensions. “Pension rights are contract rights under the Michigan constitution” and contracts are at risk for cuts under federal bankruptcy law.

Detroit plans on unveiling a proposal in January 2014 to restructure its estimated $18 billion in long-term debt, which makes it the largest-ever municipal bankruptcy in U.S. History.

The city’s unfunded pension liability has been estimated at between $3.5 billion and $8 billion.  The pension funds would undoubtedly receive only a fraction of what they are owed. The pension cuts will have a devastating on city employees and retirees who hoped state law would protect their pensions.

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About Dunne Law Offices, P.C.

Philadelphia Bankruptcy Attorney You may see chapter 7 or chapter 13 as a last resort. But with proper financial planning and legal advisement on your side, bankruptcy can be the moment when you regain control of your finances. I want to support you with all the legal expertise, experience, creativity and deductive reasoning I have to give. My life has been dedicated to developing the skills and experience that allow me to help you navigate financially difficult times. Education As an undergraduate at Pennsylvania State University, I served as an infantry soldier in the Pennsylvania National Guard and as a cadet in the R.O.T.C. My major in Criminal Justice led me to attend the New England School of Law in Boston. Once there, I honed in on bankruptcy law and was a scholarship recipient for “Securities Regulation.” I followed that with an internship at the Boston Stock Exchange and a clerkship for McGarthy & Ged. During this time, I learned how to help people find financial relief through legal action. Professional Memberships and Recognition Bankruptcy law changes every day. Right now, courts across the United States are making decisions that will impact your judge’s point of view on your case. As an effective consumer bankruptcy lawyer, I stay apprised of the most recent happenings in the field through active membership in the following organizations. State Bar of Pennsylvania – Licensed to practice before all state courts, the United States District Court for the Eastern and Middle District of Pennsylvania, as well as the United States Court of Appeals for the Third Circuit National Association of Consumer Bankruptcy Attorneys (NACBA) National Association of Consumer Advocates (NACA) Call for a free consultation at (215) 551-7109.
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