Nov 17 2007 5:25 PM
Last Updated: Saturday, Nov 17 2007 5:29 PM
Bankruptcy filings have shot up this year as desperate homeowners scramble to elude foreclosure,
local attorneys say.
During the first half of the year, 530 consumer bankruptcy cases were filed in Kern County, a near doubling of the 266
cases filed during the same period in 2006, according to Bakersfield bankruptcy attorney R. Scott Bell, who reviewed records
from the U.S. Bankruptcy Court for the Eastern District of California.
And Chapter 13 bankruptcies -- the most typical filing for borrowers trying to catch up with late mortgage payments and
save their homes -- accounted for 23.2 percent of all consumer bankruptcy filings in Kern, compared with 20.7 percent during
the same period in 2006 and just 8.5 percent in the first six months of 2005, Bell wrote in a news release.
"Every single day, someone will come to see me because they're starting to lose their house, they're getting behind on
their payments," Bell said.
Some of the increased bankruptcy activity may be due to a drop-off in filings following the 2005 passage of federal legislation
that increased requirements for people seeking to file bankruptcy, Bell said. But he said the pattern suggests much of the
rise in Chapter 13 filings is linked to Kern's high foreclosure rates.
One recent morning at the public foreclosure auctions that take place on City Hall's steps, seven of the 18 postponed home
sales were halted by bankruptcy filings.
As people try to make high mortgage payments, they often run up credit card debt as well, which in turn may lead to bankruptcy,
said Phillip Gillet Jr., a local bankruptcy attorney.
Recently, Gillet has also handled a number of bankruptcies for clients seeking to halt foreclosure.
A Chapter 13 petition, which might cost around $1,000 in upfront filing and attorneys fees, will halt foreclosure proceedings,
he said. But bankruptcy will not work for every homeowner in trouble.
"If you have a payment of $5,000 a month, and you cannot pay that, then a bankruptcy won't be able to save a house," Gillet
About two-thirds of local bankruptcy cases ultimately fall apart, Gillet said. Chapter 13 bankruptcies reorganize debt
and allow for a five-year repayment plan.
So bankruptcy can spell salvation for someone who experienced an illness or a temporary period of unemployment and fell
behind on their loan payments. But Chapter 13 does little for someone saddled with a mortgage payment that was too high from
the start, Gillet said.
"The success rate is ultimately low," he said.