San Francisco Foreclosures and Bankruptcies Continue to Rise

by on cities

San Francisco foreclosures and bankruptcies continue to rise as more homeowners lose their jobs and as financial difficulties spread into middle class enclaves, which were previously strong enough to weather the initial months of the economic meltdown.

Based on data from the San Francisco section of the U.S. Bankruptcy Court, which covers San Francisco County and San Mateo County, nearly 4,200 bankruptcy cases were filed in 2009, a sharp increase of 62 percent from the 2,579 cases filed in 2008.

The 62-percent increase in filings also occurred in the San Joaquin County section. Bankruptcy cases increased from 2,445 in the first 10 months of 2008 to 3,962 cases in the first 10 months of 2009.

In the Oakland section of the bankruptcy court, which covers the counties of Alameda and Contra Costa, bankruptcies increased from 7,887 cases in 2008 to 12,564 cases in 2009.

Oakland bankruptcy lawyer Max Cline said that he had to hire one more attorney, in addition to his own son, to run his law office because of the sharp rise in people seeking legal help for their bankruptcy filings and their efforts to save their homes from listings of San Francisco foreclosures.

According to Cline, who has been handling bankruptcy cases for 35 years, aside from the increase in cases, the profile of clients have also changed. More bankruptcy cases involve professionals who have been laid off and who have been hit with increased mortgage payment notices. In the past, bankruptcies were filed by people who suffer financial problems because of divorce or serious illness.

Cline added that he is now handling cases from people who would not consider filing for bankruptcy in the past and who have never thought they would see their properties turn into bankruptcy homes. These people are typically in their 50s, have exhausted their retirement money and no longer medically insured.

Sheri Powers, head of the Homeownership Center of nonprofit Unity Council in Oakland, said that too many kinds of loans and too much debt are pushing more families into bankruptcy. Many families are not only facing the risk of mortgage foreclosures; they are also facing tax lien foreclosures.

According to San Jose lawyer James Ike Shulman, one of the founders of the National Association of Consumer Bankruptcy Attorneys, mortgage difficulties will continue to push homeowners into bankruptcy unless banks write down mortgages.