Chapter 9, Title 11, United States Code

On July 18, 2013, Detroit, Michigan became the largest city in the history of the United States to file for Chapter 9 bankruptcy protection.

[7] During the Great Depression, this approach proved impossible, so in 1934, the Bankruptcy Act was amended to extend to municipalities.

[12] Chapter 9 was largely unchanged until it was amended in 1976 in response to New York City's financial crisis.

In 1988, Chapter 9 was amended by Congress to provide statutory protection from § 552(a) lien stripping provisions to revenue bonds issued by municipalities.

[16] Municipalities' ability to re-write collective bargaining agreements is much greater than in a corporate Chapter 11 bankruptcy[17] and can trump state labor protections,[18] allowing cities to renegotiate unsustainable pension or other benefits packages negotiated in flush times.

Three states (Colorado, Illinois, and Oregon) grant a very limited authorization to file for bankruptcy.

[24] Certain politicians and scholars have argued that the law should be amended to allow states to file for bankruptcy.

[27] Opponents, including representatives of the National Governors Association, say that amending the law to allow states to seek bankruptcy protection could create doubts in the municipal bond market.