Subprime Loans Rock Orlando as Bankruptcy Filings Rise 96%

Each U.S. state and city has been impacted by the subprime mortgage crisis in a different way, with some areas untouched and others devastated.

Florida has been hurt badly as many home buyers got into properties through interest-only loans or adjustable-rate mortgages with low "teaser" rates. The extent of the problem was portrayed this week in a story in the Florida Sentinel newspaper that said personal bankruptcies almost doubled in Metro Orlando last year.

Nearly 7,060 debtors declared insolvency in Orlando’s federal bankruptcy court in 2007, up 96 percent from 2006, the U.S. Bankruptcy Court for the Middle District of Florida reported.

Of the district’s largest metro areas, filings in Tampa rose nearly 78 percent, while Jacksonville recorded a 44 percent rise. The three divisions saw bankruptcy filings rise nearly 73 percent to 26,424 bankruptcy cases. Nationally, bankruptcies increased 40 percent in 2007, the Sentinel reports.

“Personal bankruptcy is reaching all levels of the income spectrum — from affluent professionals to lower-income subprime borrowers,” the Sentinel reported.

"I have doctors, Realtors, mortgage brokers and all kinds of people who had rental properties who are in trouble now," said Andrew Baron, a consumer-bankruptcy lawyer in Orlando. "These are people who never dreamed they’d be facing this kind of situation. And they’ll resist until the bitter end before they file bankruptcy."

One change is the increase in the young people filing, experts said. "You just see more people in their 20s and 30s going into bankruptcy these days, unlike earlier generations, who would consider it the very last resort," said Rosanna Jacobsen, a financial-literacy advocate and local executive with Colonial Bank.

The filings remain lower than those seen in the years leading up to 2006 when consumers rushed to file before the enactment of a new federal bankruptcy law.