[JackOfVA]

Chapter 9 is only for cities, counties and similar sub-divisions. There is no mechanism in the bankruptcy law for a state.

I’m confident, however, that the ultimate game plan is for the deeply indebted states such as IL, CA, NY, to push their liabilities off on the rest of the country via a Federal Government bailout. Grossly unfair to those states that run prudent finances, but he who has the most votes wins.

[RayChuang88]

I think California will do okay because of the technology and entertainment sectors and New York will do okay because of Wall Street (though there could be trouble if we have another 2008-style economic meltdown).

The solution for Illinois is to use Chapter 9 for Cook County (where Chicago is located) if things in Chicago get out of control. That's probably where most of the economic problems of that state come from.