Bankruptcy is not just for individuals and businesses. In certain states, municipalities can file for bankruptcy as well. Recently, the city of Detroit filed for bankruptcy, becoming the largest municipal bankruptcy in terms of both population size and debt load.

On July 18, 2013, Detroit filed for bankruptcy. Detroit has approximately $18.5 billion dollars in debt. While the population of Detroit is large (approximately 700,000 people live there), Detroit has lost over half its population from its peak in 1950. Further, it seems that the city is decaying. There are almost 78,000 abandoned buildings in Detroit, and Detroit's murder rate is at the highest it has been in a long time.

While bankruptcy may be the best answer for Detroit to solve its financial problems, it will not be an easy bankruptcy. Experts believe that the case may last up to three years and that the cost could be in the hundreds of millions of dollars.

Further, there are those who object to Detroit's bankruptcy filing. In fact, just a day after the bankruptcy filing, a state court judge held that the bankruptcy filing violated the state constitution. While this ruling is unlikely to derail the bankruptcy case, it shows that Detroit has a long road ahead of it.

Sources: Nick Carey, Reuters, " Detroit files for bankruptcy, stage set for court fight," July 18, 2013; Susanna Kim, ABC News, " Judge Says Detroit Bankruptcy Unconstitutional," July 19, 2013