The crushing debt of over $18bn (£12bn) has accumulated over decades due to mismanagement, narrow tax revenue, and a massive population exodus—from a population of nearly 2 million to now less than 700,000.

Michigan Governor Rick Snyder said the decision to file for Chapter 9 bankruptcy protection (from creditors and unions) came as a result of a virtual breakdown in public services available to the Detroit citizenship.

“The fiscal realities confronting Detroit have been ignored for too long. I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future,” said Mr Snyder of the city’s freefall from prosperity.

“This is a difficult step, but the only viable option to address a problem that has been six decades in the making.”

Since the upper-middle class demographic migrated to suburbia during the motor vehicle industrial boom, the city has been hollowing from the centre out.


Once the fourth-most-populous city in the US, Detroit is now laden with blight. Unlit streets, vacant lots, and tens of thousands of abandoned buildings bear physical testament to the decline and neglect of the iconic American metropolis.

Because of the low tax revenue, public services have been eviscerated over the years, and many think that filing for bankruptcy will only exacerbate the issue of municipal preservation.

The New York Times reported that some bankruptcy experts and city leaders bemoaned the likely consequences from the filing, including the stigma. They anticipate further benefit cuts for city workers and retirees, more reductions in services for residents, and a detrimental effect on borrowing.

But others, including some Detroit business leaders who have seen a rise in private investment downtown despite the city’s larger struggles, said bankruptcy seemed the only choice left — and one that might finally lead to a desperately needed overhaul of city services and to a plan to pay off some of the overwhelming debts.

Like so many struggling American families, Motor City is looking for a second chance.