Home Foreclosures Pushed Bankruptcies in Central Valley

Home foreclosures helped drove bankruptcies in the Central Valley region of California in 2009, based on data from the U.S. Bankruptcy Court. Last year, bankruptcy filings soared by almost 50 percent compared to filings in 2008, rising to their highest level reached in the region. A total of 45,924 bankruptcies were filed in federal courthouses in Sacramento, Modesto and Fresno, with Sacramento posting the highest number - almost 29,000 filings. In 2008 in the Eastern District, over 31,000 bankruptcies were filed, marking a 79-percent increase from the almost 17,400 bankruptcies filed in 2007. According to Richard Heltzel, court clerk at the U.S. Bankruptcy Court in Sacramento, the number of filings has overwhelmed the court and has put the court into a frenzy of work. Analysts said that in California, especially in the San Joaquin Valley region that cover Merced, San Joaquin and Stanislaus counties, bleak economic conditions have pushed families into hardships they could not recover from. State government furloughs, record high jobless rate levels, falling home values and business failures have forced large numbers of homeowners to move out of their foreclosed houses. California still holds the highest figure for home foreclosures in the latest nationwide report released by a foreclosure tracking firm based in the state. In November, almost 74,000 residential properties in California entered default or foreclosure listings. Despite a slowdown in foreclosure rate, nearly 15,000 homes across the state were repossessed by lenders. Because the jobless rate in the region has already surpassed 17 percent and is expected to rise further to 20 percent, more foreclosures are predicted. With the sharp increase in number of loans backed by federal agencies such as FHA, Fannie Mae and Freddie Mac, government foreclosures are also predicted to increase. Heltzel reported that state employees suffered 15-percent pay cuts resulting from the furloughs. As these employees are already suffering financially even before the pay reductions, it is not surprising that they become bankrupt after the furloughs. Lawyer Jonathan Stein said that foreclosure is among the major reasons for bankruptcy among his clients. Families no longer are able to pay their monthly bills and no longer have the ability to save their homes from foreclosure. Across the country, a total of 1.43 million bankruptcies were filed in 2009, marking a 32-percent jump from 2008. As home foreclosures continue to hinder economic recovery, bankruptcies are expected to increase by as much as 20 percent in 2010. Start your Search for:

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