A federal judge is expected to rule Tuesday on whether Detroit is eligible for bankruptcy protection, a crucial step in the city’s effort to pay off part of its overwhelming debt and to begin rebuilding its vastly diminished city services.

The decision, which is to be issued by Judge Steven W. Rhodes of the United States Bankruptcy Court, is also a significant legal test for Detroit, which in July became the largest American city ever to seek bankruptcy protection. If Detroit is ruled eligible to reorganize under court protection, lawyers for the city and its appointed emergency manager may move ahead in submitting a plan to pay off part of its debts and to start reinvesting in essential services.

City officials have said such a plan could be filed before the end of the year, and that the city, once the nation’s fourth largest, might emerge from bankruptcy in 2014.

Read it at NY Times.