Unfortunately, bankruptcy and foreclosure are often very related issues. Financial troubles leave many homeowners thinking they should simply walk away from their homes, especially if they owe more on the home than it is actually worth.
There may be good news on the horizon. Florida state courts currently have a mediation program that is intended to help homeowners negotiate with their mortgage lender and reach a mutually beneficial agreement. But the program has met a fair amount of criticism as not encouraging honest participation. Parties sometimes fail to show up and don’t always follow the terms of the agreement.
The program was a step in the right direction, however, and Florida’s federal courts have taken notice. And unlike Florida’s state program, the federal program has been very successful so far. It is still a relatively young program, but 90% of those who have used it have been approved for mortgage modifications.