BIRMINGHAM, Ala. – Jefferson CU on Thursday said it will provide a line of credit for cash-strapped Jefferson County to make credit card purchases after Bank of America cut the credit limit on the bankrupt county’s credit cards.
Earlier this week, county officials said Bank of America reduced the county’s credit limit from $100,000 to $30,000 after the county skipped a $15 million debt payment this month to investors holding general obligation warrants.
The cash-strapped county maxed out its credit card last week and was unable to make additional purchases.
The credit union’s move comes as county officials are battling with creditors in U.S. Bankruptcy Court over who controls the revenues from the county’s sewer system and a week after the county voted to withhold a $15 million payment in its sewer bonds.
Jefferson County filed for bankruptcy in November after county and state officials, a court-appointed receiver, and bondholders failed to implement a deal that would have reduced $3 billion in debt tied to the failed financing of a sewer renovation.
