Residents of central Florida have endured a rough stretch of years recently. The housing bust hit the state particularly hard, leaving many mortgages underwater and many people out of a job or on a reduced income. From 2007 to 2010, central Florida saw an annual increase in the number of bankruptcy filings. But 2011 reversed that trend. Through the first 11 months of last year, there was a 16 percent decrease in bankruptcy filings compared to 2010. This result mirrors a national downward trend in bankruptcies.

These numbers may offer hope of a recovery that economists have seemingly promised for years. But experts caution that a one-year decrease in bankruptcy filings does not necessarily indicate that the financial picture for many Floridians is getting any rosier. Experts say that they have seen an increase in the efforts people have made to pay down credit card debt. Unfortunately, many people have resorted to exhausting their savings and 401(k) plans in order to pay down debt. When that cash runs out, times can get tough.

The reality is that many people are still facing trouble paying their debts, whether a mortgage, an automobile loan, or credit card bills. The prospect of facing home foreclosure or repossession of goods can be an extremely stressful experience.

Bankruptcy can offer consumers in serious debt trouble the opportunity for a fresh start. The two relevant chapters for consumers are Chapter 7 and Chapter 13. Each provides a different solution to debt issues, but you have to pass certain tests to enter one or the other. The bankruptcy process is full of rules, and since consumers are often concerned about how those rules will affect their home, car, and other possessions, the advice of an experienced attorney is essential.

Source: Orlando Sentinel, “Orlando-area bankruptcies on pace to dip for 1st time in 5 years,” Richard Burnett, Dec. 15, 2011.