Do you seriously contend that the problems plaguing Detroit are a result of their residents' collective failure to organize their lives properly? I think most people agree that the rampant poverty in Detroit -- and the resulting unpaid water bills -- are largely a result of city-level mismanagement and the evaporation of employment opportunities resulting in tax-revenue death spiral. We're talking about a city where the police sometimes just don't show up in response to burglaries and the school system doesn't provide city-wide busing. And you're here lecturing the entire population of Detroit about financial responsibility.

Perhaps there are some Detroit residents who, if they were just a little more organized, could get themselves into a better situation. But some of them are just in bad situations no matter what they do. And who knows, maybe some of them haven't paid their water bills because they have decided that food, shelter, and medicine are more important. But nah, best to leave them with no running water. Otherwise, how will they learn?

Edit: I suspect if the city of Detroit offered the deal you're suggesting, there would be lines for it around the block (though even these lines would contain only the people who had transportation to get to the line, had someone to watch their children while they worked, etc.).