After all the bankruptcy filing numbers came in and all the dust settled, like expected, another record was set. The government keeps saying that things are getting better and we are in a recovery phase. I guess it depends who you ask. There are many highly educated individuals that are pumping gas because their unemployment ran out. Technically, I guess that means they're working. This year so far, the bankruptcy filing rates remain kind of flat compared to 2010. Although it doesn't seem to be going up this year, there will be probably another million and a half people filing bankruptcy before 2011 finishes.
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What's happening is the perfect storm is being created with 2012 is being expected to be another record year for filing bankruptcy. Currently, divorce attorneys are reporting that because of the hard times couples are staying together because they can't afford to support two households. Eventually, all that will change. Real estate sales are still at all-time lows and the only reason is that foreclosure is also flat because banks can't sell the property they have on the books. Until they can move the foreclosures they are sitting on, there is no reason to pursue the mortgage debtors at this time. Next year, because of the subprime market there is a large amount of loans that will come due. As expected, most of these people carrying these loans that did not refinance will fail. With no jobs it is impossible for people to qualify for a loan, so there is no wonder that the bankruptcy and foreclosure rate will go through the roof in 2012.
Many experts are predicting that 2011 is the calm before the great storm. It's sad to say, the real problem is that Americans are way over their head in debt and have virtually no equity in anything to protect. At the peak of the credit market people took out all their equity on their home to go on extravagant vacations, buying boats and expensive cars they normally couldn't afford. They thought they were living the American dream with no end in sight. The younger generation was many times asked "what would they do if they couldn't afford it?" And they would say I'll just sell it and pay off my debt and keep the profit. Obviously, as everyone knows that didn't work out too well. In speaking with your grandparents you'll hear things like everything that goes up comes down. Now, Americans have run out of money, their credit is shot in their house is in foreclosure. With jobs being so scarce most individuals use every penny they get towards their living expenses.
Homeowners are still trying to modify their mortgages to lower their payments in lieu of filing bankruptcy. Most people attempting this quickly become discouraged when they find out that 95% of these don't even go through. So, the months of hoping and continuing to make the payments are wasted. Many of these same people end up in foreclosure. Many banks nowadays are moving very slowly at foreclosing on properties because it will be just more assets that they will have to maintain. Also, banks know flooding the market with foreclosure properties will drop the values of all real estate in that area.
Anyways, bankruptcy filings for 2011 will not be as robust as originally expected and because of this the government will trumpet the bankruptcy filing numbers saying the recession is over. When 2012 rolls around, all bets are off and the eye of the storm will hit. If you're in this situation, be proactive and consult a bankruptcy attorney to evaluate your options. Don't wait until the storm hits, because it will be too late.
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