For most people, bankruptcy is a last resort when it comes to dealing with debt. It is an aggressive — yet effective — solution that can wipe out debt and allow a person to make a fresh financial start. Filing for bankruptcy can also stop creditor harassment and foreclosure, though there are exceptions.
For instance, did you know that being labeled as a serial abusive filer can prevent a person from stopping foreclosure sales? This issue has recently come up in Florida courts; in Tampa Bay alone, about 85 people have been barred from refiling bankruptcy after allegedly abusing the system in an attempt to stop foreclosure.
Filing a bankruptcy petition is usually an indication that a person will be resolving debts through bankruptcy. Once a petition is filed, therefore, creditors are to cease collections efforts. Typically what follows is a process of submitting paperwork including a list of assets and liabilities so that debts can be reorganized or discharged.
However, according to reports, homeowners across Florida have been repeatedly filing bankruptcy petitions to stop foreclosure without following through with the process. In some cases, people have filed four or five times in just a couple years.
Judges have stated that this behavior is a drain on already-strained bankruptcy resources. It has also been argued that the scheme is an attempt to defraud banks and keep homes without making mortgage payments. In response to this problem, judges are now banning serial abusive filers from refiling for at least two years. They have also indicated that any attempt to file a petition will not result in the stoppage of foreclosure efforts.
This is certainly an upsetting situation because it casts a shadow on the legitimate claims that millions of people file every year. It can also make people even more skeptical about bankruptcy which can make filers uneasy, uncomfortable and intimidated.
However, it is important to recognize that nothing about the process has changed for people filing legitimate bankruptcy petitions in an effort to tackle and resolve debt. Filing can still put a stop to foreclosure and creditor harassment. But because of the increased attention being paid to bankruptcy claims in Florida, it can be wise to consult an attorney.
Source: Tampa Bay Times, “Tampa Bay judges crack down on serial bankruptcy filers,” Susan Taylor Martin, June 21, 2015