Finance news. My opinion.

In Detroit, the unthinkable — an automaker bankruptcy — has become very thinkable.

President Obama is giving General Motors 60 days to come up with a more aggressive plan to cut costs and debt. Chrysler is only getting half that time to work out a combination with Italian automaker Fiat. If they fail, the government will force them into bankruptcy court.

On Tuesday, new GM (GM, Fortune 500) CEO Fritz Henderson said the company might be in bankruptcy even quicker than that if negotiations with creditors and the United Auto Workers union don’t go well.

Americans have grown used to the bankruptcy of airlines, retailers and other businesses. But a bankruptcy of one or more of Detroit’s Big Three could have a much more wide-ranging impact on the U.S. economy. Here’s what a bankruptcy could mean for car owners, dealers, auto workers, suppliers, lenders and U.S. taxpayers.

Consumers

The government has announced it will stand behind the warranties for new GM and Chrysler cars. But that would do little good to somebody trying to sell a model that winds up being discontinued. The loss in resale value could be tremendous.

After GM and Chrysler killed off Oldsmobile and Plymouth, two-year old vehicles of those discontinued brands were worth as much as a similar five-year old model at the companies’ other brands, according to used car price tracker Kelly Blue Book.

And if either company was forced to go out of business due to bankruptcy, it would cost people a lot more to buy a new car. Even with demand for new cars at a 26-year low, a shutdown of all GM or Chrysler plants could soon create a shortage of new cars.

That would allow other automakers to pullback from the record average of $3,169 in cash-back and other incentives now being offered to buyers. Jesse Toprak, industry analyst with sales tracker Edmunds.com, estimates that average incentives could fall by about $1,000 per vehicle within a year or two if GM and Chrysler were forced to halt operations.

Auto Workers

The popular assumption is that bankruptcy would give GM the power to get out of their labor contracts with the United Auto Workers union and other unions that put them at a competitive disadvantage to nonunion automakers such as Toyota Motor (TM). The truth is far more complicated.

Heidi Sorvino, head of the bankruptcy practice in the New York office of law firm Smith, Gambrell & Russell, said it is much tougher for a bankrupt company to shed its labor contracts than other obligations.

The threat of bankruptcy gives management far greater leverage at the negotiating table. But the legal process is cumbersome enough that management at bankrupt companies typically find it quicker to reach a new labor deal than have the court impose one. Bankrupt automaker Delphi took nearly 21 months to reach a new deal with the UAW after its bankruptcy filing.

So while GM might get better contracts in bankruptcy than they would outside of bankruptcy, the 54,000 UAW members would not be at the mercy of whatever the company wanted to impose on them.

John Weykamp, an auto restructuring expert at accounting firm Crowe Horwath said retirees at GM would probably continue to have health care coverage, although the company would likely not have to put as much money into the trust funds that are being set up to pay for that coverage. And he doubts the union would be pushed by management to accept significant pay cuts.

Dealerships

Both companies have announced plans to cut their bloated network of dealerships, which were established when they had a much larger share of the nation’s new car market. But cutting ties with dealers is an expensive process, given the strength of state-by-state dealer franchise laws. GM spent about $1 billion to drop its Oldsmobile brand, most of it to buy out dealers.

Bankruptcy could make it easier for the companies to get out of those dealership agreements, although Sorvino said that dealers would still have the ability to challenge such a move in court.

"It’s not a slam dunk," she said about using bankruptcy as a tool to get around franchise laws.

But the bigger problem could be finding money for the dealers that stick around. Dealers need financing to buy vehicles they hold in inventory, and it’s not clear whether lenders such as GMAC, now an independent bank holding company, would continue to provide dealers with that crucial financing if GM was bankrupt business