Grand Rapids, MI -- (SBWIRE) -- 07/31/2013 -- With so much going on in the economy, it can be hard to keep up with everything that is happening in the world today.

Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC gives a hand.

Whether people enjoy his monthly newsletter at www.moving-markets.com or his blog at http://www.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On July 29, 2013 his blog was titled Motown - Bankrupt.

"In an economic winter season, debt levels reach unsustainable levels," began Tubbergen. "One of the symptoms of economic winter is a high level of bankruptcies at the personal, corporate and government level."

Tubbergen goes on to say that while we have observed a number of municipal bankruptcies over the past few years including Jefferson County, Alabama; Central Falls, Rhode Island; and Stockton, California; the City of Detroit’s recent filing represents the largest municipal bankruptcy filing to date.

"Seems that Detroit finds itself deeply in debt to the tune of around $20 billion," explained Tubbergen. "Given the city has about 700,000 residents, that’s between $28,000 and $29,000 in debt per resident. To put that level of debt in perspective, the U.S. Census Bureau reports that the median household income in Detroit is $27,862 annually, about the size of the debt owed when broken down in terms of per household."

Tubbergen shares a bit about how the bankruptcy process will proceed from this point as published in USA Today on July 18, 2013.

Chapter 9 bankruptcy is poorly understood, in part because it happens so infrequently. Detroit's case is the largest in U.S. history.

Here's what happens next:
- The city filed a Chapter 9 bankruptcy petition Thursday in the U.S. Eastern District Court of Michigan. The filing includes additional information on the city's financial outlook and could include details about the city's plan to cut costs, such as potential layoffs and department consolidation, said Ken Schneider, a bankruptcy attorney with Detroit-based Schneider Miller PC.
- Alice Batchelder, chief judge of the U.S. 6th Circuit Court of Appeals, will appoint a bankruptcy judge to oversee the city's case. The bankruptcy judge will determine where to hold hearings, which could take place in Detroit, Kentucky, Ohio or Tennessee.
- An automatic stay will be issued on most of Detroit's bills, including unsecured debts, Schneider said today. The city will continue to pay secured creditors, including water and sewer bondholders, who have the right to seize city assets if Detroit fails to pay.
- An automatic stay also will be issued on lawsuits against the city, including outside challenges by pension officials and union members. This means hearings in those lawsuits will be indefinitely delayed. The plaintiffs can recast their arguments inside of bankruptcy court, said Jay Welford, a bankruptcy attorney and partner at Southfield-based Jaffe Raitt Heuer & Weiss.
- The city doesn't need approval to continue services. For example, the police, fire, water, sewer and public works are completely unaffected by the bankruptcy filing for now and will operate as usual. However, cuts are possible in the future. "You have the ability to use your cash," Welford said. "You don't need court approval."

"The biggest issue here is likely to be the legal battle between the pension funds and the bondholders," explained Tubbergen. "Pension funds claim that pensions are underfunded by over $9 billion while water and sewer bondholders have the legal right to seize property if the City fails to pay. How this legal battle plays out will be interesting to say the least. And, many other financially struggling cities will be watching."

What is Tubbergen's bottom line here?

"Regardless as to whether you would side with the bondholders or the pension recipients, there is one thing obvious," he concludes. "The city can’t pay all its bills; it is a mathematical impossibility."

To read the blog in its entirety go to http://www.dennistubbergen.com and select his July 29, 2013 entry.

Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at http://www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.