South Florida bankruptcy filings were down substantially in the 2nd quarter compared to last year, according to data released by the U.S. Bankruptcy Court for the Southern District of Florida. Personal bankruptcy filings (Chapter 7 & Chapter 13) in Palm Beach, Broward and Miami-Dade counties totaled 7,194 from April through June of 2012 (down 23% from 2011).
Bankruptcy filings can be linked in large part to the rate of foreclosure filings and foreclosure sales, which slowed in 2011 due to the banks’ robo-signing debacle and nationwide settlement with states’ attorneys general. While foreclosure filings begun to pick up steam again, many homeowners are avoiding bankruptcy by obtaining loan modifications or participating in the short sale process.
Bankruptcies increased in 2007 and 2008 following the collapse of the housing market but are now starting to taper off with the demand for housing in south Florida starting to make a come-back and the willingness of servicers to participate in the loan modification process improving.
A struggling homeowner tends to file for bankruptcy just before the bank is scheduled to repossess a property. The bankruptcy filing temporarily halts the foreclosure action and buys the borrower more time to negotiate with the lender. When the value of a property is less than what’s owed, the lender can go back to court after the foreclosure and hold the homeowner responsible for the difference. Bankruptcies wipe out these so-called deficiency judgments. A bankruptcy also may discharge a second mortgage.
If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987, send an e-mail to firstname.lastname@example.org, or complete the contact form below.