Last year, a record number of people and businesses filed for bankruptcy protection in Florida and across the country. In fact, bankruptcy filings in 2010 topped the levels we saw in 2005 before the bankruptcy laws were changed.
Now, it appears that bankruptcy filings may be slowing down again. During the first quarter of 2011, bankruptcy filings in one Florida bankruptcy district were down by more than 15 percent. However, many are speculating that the downward trend will not continue.
About 2,500 fewer people and businesses filed for bankruptcy protection in the U.S. Bankruptcy Court of Florida’s Middle District during the first quarter of this year than filed at the same time last year. While the downward swing could be attributed to the end of the economic recession, so have speculated that the slow in the foreclosure process has something to do with it.
As foreclosure actions take longer to work their way through the system, many homeowners have been able to stay in their residences without paying their mortgage. That frees up other money to pay bills and stay on top of other debts. So some homeowners develop a false sense of financial security. When those homeowners are faced with the reality of foreclosure, experts speculate they may turn to bankruptcy.
However, for now, it looks like people in Florida might be regaining their financial footing. Filings for chapter 7, chapter 13 and chapter 11 bankruptcy were all down from the same time last year. Lower income individuals and small businesses still appear to be struggling the most, as chapter 7 individual and business liquidation bankruptcies account for nearly 75 percent of bankruptcy filings.
Source: Jacksonville Daily Record, “Bankruptcies declining after record 2010,” Karen Brune Mathis, 11 April 2011