Personal bankruptcies decrease in Florida for 2 straight years
Personal bankruptcies have fallen throughout parts of Florida for the second year straight. Financial challenges continue to be a difficult issue nationwide since the housing market collapsed in 2007. In Florida, foreclosure activity is still the highest in the country, so many experts in bankruptcy law aren’t sure why there is a decrease in the amount of Florida bankruptcies.
Some financial experts speculate that the downward trend for personal bankruptcy started with a year-long moratorium on foreclosures in 2011, after the government launched an investigation on some lenders’ questionable foreclosure practices. This had a noticeable effect on the amount of bankruptcies filed in 2011, but when foreclosure activity resumed early last year, the bankruptcy rate continued declining. In the Orlando area alone, the number of bankruptcies filed has decreased 9.3 percent compared to last year’s numbers.
There are a few other reasons that might explain this downward trend for personal bankruptcies. The unemployment rate is also decreasing. Research companies have shown that Florida includes one of the top areas in the nation this year for paying down credit card debt. This could be a sign that Americans are starting to recover from the struggling economy.
However, there are still a few pitfalls to be aware of. With the Mortgage Forgiveness Debt Relief Act of 2007 expiring, personal bankruptcies may again increase. The act exempted people from paying taxes on forgiven debt from loan and mortgage issues, including foreclosures. With the expiration of this act, many people may suddenly find themselves owing a great deal of money in taxes.
Source: Orlando Sentinel, “Orlando bankruptcies fall for 2nd-straight year, heading for lowest mark since 2008,” Richard Burnett, Dec. 30, 2012