The total Debt acquired by the Federal Government in Washington, DC, is approaching Twenty Trillion Dollars. The question becomes, with the Federal Government in Debt to a degree that could never be repaid, can the United States of America file Bankruptcy?
The Bankruptcy Code provides for many forms of Entities, the opportunity to file Bankruptcy. A Chapter 7 Bankruptcy may be filed by a Corporation or an Individual. A Chapter 13 Bankruptcy can be filed by an Individual but not a Corporation. A Chapter 11 Bankruptcy is a Reorganization that can be filed by an Individual or a Corporation.
There is a Bankruptcy called Chapter 9, which is a Bankruptcy that permits a Municipality to file Bankruptcy through a Reorganization of its Debts. Detroit is the largest City in the United States that famously filed Chapter 9 Bankruptcy.
However, the Bankruptcy Code does not provide a Chapter that would enable the Federal Government from filing Bankruptcy.
Fortunately, the United States of America has its own printing press. The Federal Government can print an unlimited amount of money. Theoretically, the Federal Government could pay off the 18-20 Trillion Dollars in Debt it has acquired tomorrow.
However, if the Government was to do this, you also may need a wheelbarrow of money to buy a stick of gum.
A significant portion of the National Debt is also owed to the very Taxpayers who funded Social Security. When you have your taxes taken from your paycheck to pay Social Security Taxes, you may have believed that those funds were placed in a Trust Fund so that such money would be available when you retire.
For the past thirty to forty years, Congress has been raiding the Social Security Trust Account and has all but depleted such Account.
Jay Weller is a Bankruptcy Attorney in Clearwater, Florida. Weller Legal Group of which Mr Weller is President and Founder, has been practicing Bankruptcy Law and helping persons in Debt, since 1993. Weller Legal Group has Offices in Clearwater, Port Richey, and Lakeland, Florida.
Image credit: Mohamad Razi Bin Husin