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Bankruptcy filings and foreclosures down in Pennsylvania
Pennsylvania residents are finally starting to feel some relief. Bankruptcy filings across the state, which totaled 13,552 in 2009 and 13,117 in 2010, fell, as of October 2011, to 843 for 2011.The number of foreclosed homes has also fallen from 3,014 between January and October of 2010 to 2,157 during the same period of 2011. Some say this is a good sign for the state’s economy, but others say there are other reasons for the declines.
More help offered to people struggling with debt
People are finding alternatives to bankruptcy, in part because the state government is extending unemployment benefits and encouraging banks and other creditors to offer loan modifications or work with consumers so they can manage their debt instead of having to file for bankruptcy. Consumers have also played a role by decreasing their spending and reducing their use of credit.
Some homeowners struggling to pay their mortgages also got some relief from the federal government last year, after it was discovered some mortgage companies were engaging in unfair and inappropriate practices and taking advantage of borrowers. A national mortgage settlement has slowed down the foreclosure process and forced mortgage companies to work with borrowers. This settlement is likely part of the reason why foreclosures have decreased.
In general, it is still difficult to get a lender to agree to a loan modification, but it was much harder in the past. Some mortgage lenders have been more willing to work with borrowers to modify their mortgages and make them more affordable when they are struggling with their payments.
The federal government implemented the Home Affordable Modification Program* that allows homeowners with a mortgage payment exceeding 31 percent of their gross income to qualify for loan modifications. This program has helped Pittsburgh homeowners immensely, saving qualified participant $278 per month on average.
Update: As of December 30, 2016, no new applications or new requests for assistance under any MHA program will be accepted.
Pennsylvania reflecting national trend
Nationally, consumer bankruptcy filings have decreased as well. In 2010, consumer bankruptcy filings totaled 1.41 million. During the same period in 2011, bankruptcy filings had fallen to 1.25 million. The same downward trend is reflected in foreclosure process. In 2010, 3.31 million homes in the United States went into foreclosure. This number fell to 2.27 million in 2011
Update: In 2018 US foreclosures dropped again to just over 600,000.
Reach out for help
Even though the numbers are promising, many people in Pennsylvania and throughout the United States are still struggling with debt. A bankruptcy law attorney can help people evaluate their options and decide if bankruptcy is the right course of action to help them get out of debt and get their lives back in order.