South Florida bankruptcies fell sharply in the second quarter compared with the same period a year ago, according to figures released Monday by the U.S. Bankruptcy Court in Miami.
Many people find the average attorney fee of $1,500 cost prohibitive, Miami lawyer Timothy Kingcade said. Also contributing to the decline: Consumers don't feel as desperate, with so many facing financial troubles in recent years because of the nation's economic troubles, he said.
"You sort of enjoy each other's misery together," Kingcade said.
Personal bankruptcy filings across Palm Beach, Broward and Miami-Dade counties totaled 7,194 from April through June, a 23 percent decrease from a year ago.
In June, there were 2,251 filings in the three counties, down from 3,222 a year earlier and 2,437 in May. Bankruptcies in each of the counties declined in June from May.
Attorneys say they expect filings to keep falling, but monthly trends have been hard to predict since the beginning of last year.
Brian Cohen, a Fort Lauderdale-based bankruptcy lawyer, said the recent decline may be at least partly a result of banks being conservative and lowering credit limits.
"The total amount of their credit card debt isn't as great, so people don't feel as overwhelmed by it," Cohen said. "The minimum payments are lower, so they keep making those, and they don't feel the urgency to do something drastic, like filing for bankruptcy."
Bankruptcy trends are similar to those of foreclosures, which slowed in the past year as major lenders reviewed possible paperwork errors. Filings are starting to increase again, but many homeowners ultimately avoid foreclosure by getting loan modifications or short sales -- unloading the homes for less than the mortgage amount.
Bankruptcies increased in 2007 and 2008 following the collapse of the housing market, "but I think now we're back to a more level area," said Les Osborne, a Boca Raton-based lawyer and bankruptcy trustee in Broward County.
A struggling homeowner tends to file for bankruptcy just before the bank is scheduled to repossess a property. The bankruptcy filing temporarily halts the foreclosure action and buys the borrower more time to negotiate with the lender.
When the value of a property is less than what's owed, the lender can go back to court after the foreclosure and hold the homeowner responsible for the difference. Bankruptcies wipe out these so-called deficiency judgments. A bankruptcy also may discharge a second mortgage.
Most Popular Stories
- Airport Garners Social Media Award
- Social Media Campaign Increases Organ Donor Registrations
- World Bank: Rich Countries Must Curb Emissions
- Using Acids to Unlock Shale Oil OK, Regulator Says
- Intel Working on Smartwatch; Mum on Possible Apple Link
- Banks Don't Follow Rules in Mortgage Settlement
- Fed Will Keep Buying Bonds for Now; Markets Dip
- Patriots' Aaron Hernandez Questioned in Slaying
- Tea Party Wants to 'Audit the IRS'
- Amazon Doesn't Need Tax Breaks but Gets Offered Millions