Bankruptcies Fall in 2010, but Expect Record Numbers in 2011

Welcome back after a long holiday break. Of course, it’s always great to have your blog go stagnant at the same time the blog gets featured in a great Nashville Business Journal article, “Standing out on the Web: Tips to help your clients find your business online.”

The big news in the new year is that Bankruptcy filings are down nationwide, particularly in Tennessee and the south. In the article, one attorney says the decrease is an indication that the economy has turned the corner (or that everybody who was going to file bankruptcy has already filed).

I’m not so sure.  Throughout 2010, we learned that banks were reluctant to foreclose, either as a result of issues with their paperwork, being adverse to taking properties into REO, or being hopeful that the mortgage modification programs would help.

As we ended 2010, we learned that none of those factors were a long-term issue that would prevent foreclosure. I expect foreclosures to crank back up in the next few months. Plus, as more second and other junior lienholders come to the realization that their collateral lacks value, 2011 will bring more lawsuits on the underlying debt.

The rise in foreclosures, coupled with more deficiency lawsuits on unpaid debt, will likely make 2011 another strong year in Bankruptcy Filings.

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