The number of those filing bankruptcy and foreclosure has reduced this year

It was reported on Realty Track that the number of foreclosures is slowing down. According to the statistics of homes lost to foreclosure were down by 2% last year. It's not saying that the numbers aren't still real high, but they have gone down. This fact is interesting because the number of individuals filing for bankruptcy in 2011 has also dropped. This leads to the question, Is the recession over? This question has perplexed many expert economists, because the numbers are showing something different than what is happening.  The unemployment rate still stands at over 9.2% nationwide and many businesses have been closing their doors and filing bankruptcy. This doesn't sound like the recession is over. Another idea to kick around it is just because the number of those filing bankruptcy is down and the number of homes in foreclosure has dropped also doesn’t mean that people still aren't losing their homes. It only means the number of foreclosures filed has lowered.

There a few reasons that some believe are causing the drops in these numbers. First of all, there have been a large number of people short selling their homes to avoid foreclosure.Many people think that a short sale will keep them out of foreclosure and bail them out of this home they are upside down on. Banks are more than willing to allow debtors to sell their home in this fashion. The one thing they don't tell the debtor is they will be sent a 1099C for the deficiency that they didn't pay back on the loan. This many times forces the debtor into having to file for bankruptcy.

Another reason for the reduction in foreclosures is a deed in lieu. This is when the debtor walks from the property and surrenders it back to the lender before the foreclosure process begins. Once again, this can create a taxable event and depending on how aggressive the lender is they might even come after the debtor for the deficiency and the costs to sell the home. This is another situation that will end up in a bankruptcy filing if the debtor is smart.

It seems that technically the number of individuals filing for bankruptcy or losing their home to foreclosure might be down, but the number of families losing their homes is continuing to rise and next year is expected to be another record year for individuals filing bankruptcy.