Recently released data reveals that personal bankruptcy filings fell in South Florida for the first time in five years in 2011. Overall, the region saw 34,492 filings for personal bankruptcy, compared to 2010's total of approximately 38,000. Bankruptcies in December fell 9 percent from November to 2,470. While the lower bankruptcy rate might seem positive to some, experts say the drop may not mean that fewer Florida residents require bankruptcy protection. Rather, the decrease more likely signals an increase in South Florida's foreclosure backlog.

One bankruptcy attorney explained that foreclosure and under-employment both significantly contribute to the few number of liquidation bankruptcy filings. A number of homeowners at risk for foreclosure have been able to delay bankruptcy while foreclosures move slowly due to the "robo-signing" scandal and other related issues. Many homeowners facing foreclosure typically look to bankruptcy as a temporary solution, as a filing can delay a foreclosure or lawsuit for six months or even longer.

Another bankruptcy lawyer said that many Florida residents also put off bankruptcy because they are trying to find a job or are worried about credit checks. He explained, "They feel if they file for bankruptcy, they're not going to be able to get another job." Some have speculated that a 2005 federal law has contributed to the drop, as it introduced additional paperwork requirements that make filing for bankruptcy more expensive. Experts say that bankruptcy is now often seen as emergency option for Florida residents, filing for protection only when they suffer wage garnishment or car repossession.

Source: Sun-Sentinel, "Bankruptcy filings fell in 2011," Marcia Heroux Pounds, Jan. 3, 2012