(CBS News) Once a symbol of industrial strength, the city of Detroit had to file for Chapter 9 bankruptcy protection on Thursday. It's the largest municipal bankruptcy filing in U.S. history.
The reality of Detroit filing for bankruptcy does not come as a surprise as it took decades to bring down this one-time manufacturing giant.
According to the Detroit Free Press, the city holds $18.5 billion in debt and other liabilities. The motor city is also $9.2 billion dollars short in unfunded pension and retiree health care benefits, leaving city workers collecting pennies on the dollar for their plans.
CBS News contributor and analyst Mellody Hobson, explained on "CBS This Morning" that filing for bankruptcy can be viewed as a way for the struggling city to "restart," but it could also give the go-ahead for other large cities looking for a way out.
She said that Detroit's basic civil services were eroding so fast that they did not have any other options. Many schools were closing and it was reported that it could take police 58 minutes to respond to an emergency call. Filing for bankruptcy protection allows the city to erase all the debt and use their revenue to fix the problems.
"They get to restart. They're not saddled with the debt and they can reinvent the city and they can look to even the companies in their own backyard like General Motors and Chrysler that went bankrupt that came through the bankruptcy better," she said. "So it is an opportunity."
Reuters reports that 47 percent of the city's taxable properties were delinquent in 2011 and the unemployment rate is now 16 percent, which is triple what it was in 2000.
They are not alone many other cities and states are experiencing similar problems, and Hobson suggests that they will be opening the door for other large municipalities.
"Since 2010 we've had 23 cities and municipalities that have declared bankruptcy, that's a third of all bankruptcies that have occurred in our country since 1950," she said. "The suggestion is Detroit will give other cities and big cities permission to do the same thing."
For Mellody Hobson's full interview, watch the video in the player above.