One of Detroit’s major creditors, one of its pension funds for retired city workers, was able to reach a deal with the city of Detroit this past week, as reported by Reuters in an April 15, 2014 article.

Detroit’s debt is valued at about $18 billion and, after filing for bankruptcy, it was waiting for the court to approve its exit plan. The Bankruptcy Court agreed with the debtor and the “bond insurance companies over the treatment of voter-approved general obligation bonds.” Then when it comes to the retired city workers, which includes police and firefighters, the court approved the plan where it would not reduce the pension but instead it would reduce the cost of living increases.  The debtor would decrease these cost by about half of what it is right now. Moreover, the employees would have the option of joining a healthcare plan for retired workers. Detroit’s retired firefighters and police officers currently consist of about 6,500 individuals.

Detroit views this as a major step as the debtor is slowly entering into agreements with its creditors to reduce its current debt. The Chairman of the Pension Fund claims that this agreement “would increase the assumed investment rate of return for the funds.” Detroit recently dropped its plan which was aimed at building a water and sewer facility. Thus, this should take care of some of the complaints that have been raised with its plan. However, the ones that remain pertaining to its “disclosure statements” should be addressed within the upcoming week.

These things that have been agreed to are part of the new plan that the debtor filed about two weeks ago and the debtor plans to file a new plan soon to see if more of its creditors can agree and if the court will approve the settlement.

If you are in debt and are considering bankruptcy, then you should contact an experienced attorney. Jayson Lutzky handles personal bankruptcies and has 30 years of experience practicing law. He has worked with thousands of satisfied clients over the years and offers free in person initial consultations. To set up an appointment, call 718-514-6619 or visit