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Bankruptcy filings expected to increase in Florida

Even though bankruptcy filings are down around the country, the U.S. Bankruptcy Court for the Middle District of Florida is struggling with backlog cases. Furthermore, many expect the overall number of filings to actually increase as many Florida residents end up filing as a way to try and avoid foreclosure.

In terms of filings, for the fiscal year ending Sept. 30, bankruptcy filings were down 14 percent from the previous year. This decrease was seen in all types of bankruptcies, including Chapter 7, Chapter 11 and Chapter 13.

Looking to the future, many predict a huge uptick in the number of bankruptcies filed. Most of the reason for this prediction is given the fact that while the number of filings did decrease, the overall decrease was not due to the economy getting better. Rather, it was due to a slowdown as many homeowners drew out the foreclosure process by trying to obtain a mortgage modification. Additionally, the “robo-signing” scandal also led to an overall slowdown in foreclosures.

Due to these reasons, there are a number of Florida homeowners who have not made a mortgage payment in years. However, not having to pay is about to come to an end for many homeowners who will end up in foreclosure and eventually having to pay rent. This will most likely lead to more people once again filing for bankruptcy.

The prospect of more bankruptcy filings is also quite worrisome to the U.S. Bankruptcy Court for the Middle District of Florida, as the recession has also affected the court and led to a staffing shortage. This could only further the backlog issue.

Source: Tampa Bay Times, “Backlog of bankruptcy cases persists despite drop in filngs,” Jeff Harrington, Nov. 23, 2012

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