Case of the Serial Bankruptcy Filers

Jeffrey De Mauro of Tampa, Florida has done it 11 times in 7 years.  Paul Stenstrom of Palm Harbor, Florida did the same thing 9 times since 2002.  What did they both do?  File for bankruptcy.  Again and again.  Both these men did so mainly in order to continue to stay in their present homes and ward off foreclosures.

De Mauro’s last mortgage payment for his house was in 2003 whereas Stenstrom has not made any payments towards his house for 8 years.  This is made possible because of Chapter 13 bankruptcy.  Chapter 13 of the bankruptcy code allows you to reschedule the payments towards your debts and gives you up to five years to settle them.  Once Chapter 13 is filed, creditors are instantly disallowed from taking further action to claim their dues from you.  They cannot garnish your wages, freeze your bank accounts, foreclose your properties, cut off your electricity or water supply or repossess your vehicles.  Thousands of people have used Chapter 13 to avoid serious events that threaten their family and lifestyle like foreclosures.

This does not mean Chapter 13 is a means of gaming the system.  It is put in place to give you some slack in making up for the payments you are behind in or give you the time you need to sell your property before foreclosure proceedings take place.  But of course, there are those who file for Chapter 13 repeatedly simply as a means to continue living in their present homes.  De Mauro’s debt on his home grew from $84,600 to $101,856 over the last seven years due to late charges whereas Stenstrom’s loan outstanding has grown from $185,400 to $351,143.  And neither of them is breaking any law.

In Pinellas County, Florida almost half of the 1,009 residents who have had their homes scheduled for auction in January and February are still living there at least a year after foreclosure proceedings were initiated.  Another 155 in the same county still had ownership of their homes after at least 2 years, 19 for 3 years and 4 for 4 years or more.

In some of the other states, the picture is about the same.  In Florida alone, about 2.2 million residential properties have mortgages in the red.  This comes up to about 48% of the state’s total mortgages, making Florida rank an unenviable third in the country after Nevada and Arizona.

Whether you agree with serial bankruptcy filing or not, many people do it, most out of necessity for the sake of their families.

If you are contemplating bankruptcy, call us for a free consultation.  We can be reached at (813) 200-4133.