Florida Bankruptcy Statistics Show a Decline, But Many Are Still Struggling With Debt

While Florida bankruptcy filings show a decline compared to last year, experts say the percentages may be skewed. Most economists are not celebrating yet; they do not believe that Florida is quite yet on the mend as unemployment remains high throughout Central Florida.

Some believe the drop-off was caused by a temporary backlog of foreclosure filings from lenders due to the accusations of fraudulent paperwork in 2009-2010. While banks sort though legal issues and company tactics, delinquent mortgages have been put on the back burner, slowing the number of foreclosures.

The Hidden Benefit of the Foreclosure Backlog: No Mortgage Payments

Some Florida homeowners who have lost their jobs or have otherwise fallen prey to the Great Recession are benefitting from the backlog. As lenders slow the rate at which they are filing foreclosures, many people have been able to live ‘rent free’ in their home, allowing funds to be used elsewhere.

Living without a mortgage payment and being able to stay in their home is enabling some homeowners to get back on their feet financially, avoiding or postponing bankruptcy. The timing of a bankruptcy filing is a critical issue for anyone considering bankruptcy relief; the lack of a mortgage payment has given some Orlando-area families additional time and money during these difficult times.

Bankruptcy Options for Floridians

Individuals have two main bankruptcy options, Chapter 7 and Chapter 13 bankruptcy. A Chapter 7 bankruptcy, if filed correctly, will allow the homeowner to eliminate unsecured debt and keep their home.

A Chapter 13 bankruptcy allows you to restructure all debt including your mortgage in order to make payments more manageable. A Chapter 13 filing may allow a homeowner to strip a second lien on their home as well as to save the home from foreclosure if that is desired.

While bankruptcy percentages in Florida may be somewhat of a farce, the results will give hope to those who think there is only economic doom and gloom on the horizon. Recovery may be on the horizon for optimistic consumers.

Source: Orlando Sentinel, “Orlando’s personal bankruptcies dip for first time in 5 years,” 7/26/2011

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