The recent downward trend in South Florida bankruptcy filings continued last month, with fewer people filing for personal bankruptcy in February 2011 than in the previous month and the previous year. Bankruptcy analysts have speculated many reasons for this trend.
Last month, 2,389 people filed for personal bankruptcy in South Florida. That’s 11 people fewer than the same time last year. Compared with last month, 24 fewer people filed for Chapter 7 or 13 bankruptcy.
Miami-Dade County witnesses similar trends as the rest of the district, with fewer people filing for bankruptcy in February than filed in January of this year. The county also saw 3 percent fewer personal bankruptcy filings in February 2011 than in February 2010.
Some have suggested that the sluggish foreclosure process has caused more homeowners to put off filing for bankruptcy. Others argue that the cost of bankruptcy filings has prevented some from pursuing it as a debt relief option.
As the robo-signing issues and lawsuits against lenders begin to see resolution, the foreclosure process will likely pick up again. Although it is currently taking a very long time for a home to be foreclosed on, the industry has indicated that the length of time between foreclosure filings and finalization of the foreclosure will become shorter again soon. That may lead more individuals to turn to bankruptcy in attempts to keep their homes.
As for the argument that the cost of filing for bankruptcy is preventing individuals from filing, others believe that individuals may use tax refunds that they will be receiving soon to cover that cost.
In short, many believe that the factors preventing people from filing for bankruptcy in the past few months may change in the near future. Those changes could lead to a new increase in bankruptcy filings in South Florida.
Source: Sun Sentinel, “February bankruptcies down 5% from January,” Marcia Heroux Pounds, 1 March 2011