With a staggering $18.8 billion in debt, the city of Detroit, Michigan, made history on July 18, 2013, by filing for bankruptcy — the largest municipal bankruptcy filing the United States had ever witnessed.
Plenty of American cities have gone through bankruptcy proceedings, but none have come close to matching Detroit's scale as it entered Chapter 9 Bankruptcy. The city's financial obligations dwarfed even the notable 2012 bankruptcy filings from San Bernardino, California, and Harrisburg, Pennsylvania.
The sheer scope of Detroit's indebtedness is staggering, with the roster of creditors climbing past the 100,000 mark. Much of this fiscal distress traces back to "obligations backed by enterprise revenue" along with post-employment benefits that the city owed its retired workforce.
Population loss played a major role in Detroit's financial unraveling as well. The city had once boasted a population peaking at close to 1.8 million people during the 1950s, but by July 2013, that number had dropped to a reported 700,000 residents. Adding to the bleak picture, city estimates suggest that approximately 78,000 abandoned structures stand within Detroit's boundaries.
The erosion of Detroit's auto industry, compounded by surging gas prices, dealt further blows to both employment and tax-based municipal revenue. As the Detroit Free Press details in their exposé "How Detroit Went Broke," decades of financial mismanagement and corruption involving city employees and government officials only hastened what became an unavoidable bankruptcy.
From the legendary sounds of Motown Records to the powerhouse auto industry and the upheaval of the 1967 riots — and everything in-between — Detroit's past is nothing if not colorful. Yet this grim chapter earned the city the unfortunate distinction of being the most mismanaged and financially broken municipality in the nation. Even so, the heartbeat of America continues to pulse within Detroit as the city navigates its bankruptcy proceedings and begins writing its next chapter in history.