Over the past few months the Foreclosure Project team here at the Poverty Center has
been collecting data on residential foreclosures that started during 2012 in
Durham County, NC. Now as the summer season is drawing to a close, we wanted to
analyze them to see if filing for bankruptcy affected the foreclosure process.
A report published by the UNC Center on Community Capital (CCC) compared foreclosure
outcomes between homeowners who filed for bankruptcy and those who did
not. Researchers found that bankruptcy
filers experienced foreclosure sale at a lower rate than non-filers. It also
found that foreclosures with associated bankruptcy cases lasted longer than
cases without bankruptcies.
We contrasted our data to that in the CCC report. Of the 396 foreclosure cases in our sample
to date, 156 of them ended with the properties being sold. At 39% this is
considerably lower than the 59% observed in the CCC report. This may be due to
a variety of factors, including the laws in the sample jurisdiction. (All our
data comes from North Carolina, where foreclosures are predominantly
nonjudicial; the CCC data includes both judicial and nonjudicial states.)
We found that homeowners filed for bankruptcy in 10% of foreclosures, much like to the
8% observed by the CCC. In the CCC study, 59% of non-bankruptcy foreclosures
ended in sale, contrasted with 49% of bankruptcy foreclosures. In our sample, 41% of non-bankruptcy
foreclosures ended in sale, while only 27% of foreclosures with an associated
bankruptcy ended in a foreclosure sale.
Another similarity between our data and the CCC report is that filing for bankruptcy
while in foreclosure seems to extend the amount of time a homeowner can stay in
the home. The CCC report found that the
median time from foreclosure start to sale for bankruptcy cases was about 2.5
times longer than non-bankruptcy cases (20 moths for filers compared to 8
months for non-filers). Our data yielded a similar trend.
Of the bankruptcy cases that went to sale, the median time from foreclosure start to
sale was just over 9 months. But for non-bankruptcy cases the median time from
foreclosure start to sale was only 5 months. This difference in median time may
not be as wide as those in the CCC report, but it still demonstrates the trend
that foreclosures with a bankruptcy generally take longer to go to sale than
Both our data and the CCC report indicate that filing for bankruptcy may reduce the
likelihood of a foreclosed home being sold. Even if a sale is ordered, filing
for bankruptcy may give the homeowner some breathing room in terms of finding a
place to go, gathering the resources to move and relocating.
Posted by Patrick T. VanderJeugdt on Mon. August 18, 2014 3:51 PM