The State of Illinois is unable to pay $120.6 billion of their debts. Here are some of their debts:

• Illinois bond borrowings: $29.1 billion

• Promised pension benefits: $62.4 billion

• Promised retiree health care benefits: $27.1 billion

• Miscellaneous (including payments to nursing homes, child care facilities, etc): $21.9 billion.

The state Financial Comptroller Dan Hynes, said recently Illinois owes $5 billion to schools, universities, child-care centers and rehab centers around the state. He calls it "obscene?, telling the New York Times: “This is not some esoteric budget issue; we are not paying bills for absolutely essential services”.

Having overrun their budget over the years and borrowing to fund the deficits, the day of reckoning has arrived. With billions owed in bond IOUs the state?s credit – the ability to borrow – has been depleted. As a result, they are not able to pay their bills.

Unlike the federal government, state governments cannot print money. So the state has become bankrupt and in a bankruptcy, debts are discharged. That means someone loses, whether it is a credit card company, a goods supplier, a medical care provider or mortgage lender, when an individual or company files for bankruptcy. Now when it is a state government that goes bankrupt, the ones who lose are its citizens.

So what should you do if your state goes bankrupt?

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