Foreclosures nationally are down, but in Ohio the picture is still grim

Foreclosure rates around the country continue to fall, reports CoreLogic, a real estate analytics company. Despite this national trend, Ohio has seen its share of tough times - and that has continued for many Ohio homeowners. While foreclosures nationwide are down 25 percent this year, Ohio had three cities ranked in the Top 10 in the nation for foreclosure rates in August. Those cities were Cleveland, Toledo and Akron. Three other cities, Columbus, Cincinnati and Dayton were in the top 30 in high foreclosure rates. In addition, short sales, both nationally and in the state, continue to rise. Approximately 14 percent of real estate transactions involved short sales in July. That number was 9 percent the same month last year.

Foreclosure filings of all types are up 4 percent in the state from this time last year, according to RealtyTrac's Ohio Foreclosure Market Report. One of the reasons for the increase in foreclosures in the state is an overall rise in home values. In a more favorable market, banks are more willing to move on delinquent mortgages in order to sell off the distressed property.

That is not to say that people in Ohio are abandoning their homes. Nationally, Jon Hilsenrath, chief economics reporter for The Wall Street Journal, called the effort on behalf of Americans to avoid foreclosure "heroic." Unfortunately life circumstances, such as an illness, job loss or divorce can make keeping up with the mortgage unfeasible, no matter the effort on behalf of the homeowner. In Ohio, the unemployment rate is 7.3 percent, which is an increase from previous rates. National jobless numbers, while still greater than Ohio's, are dropping more quickly than the U.S. average.

Bankruptcy

For many homeowners in financial distress, bankruptcy may be the best option. Filing for bankruptcy is a difficult decision, but in many cases can be the best option for everyone involved, including creditors. Once a homeowner files for bankruptcy, they receive an "automatic stay," meaning all of their assets, including the home, are off-limits to collection actions.

In a Chapter 7 bankruptcy, many of the assets of the debtor are sold off in order to pay creditors according to the bankruptcy plan. This may include the home. However, after these assets are sold the remaining debt is forgiven so that the debtor has a clean financial slate. In a Chapter 13 bankruptcy, the debtor reorganizes debts to create a manageable repayment plan. This can include erasing some debt and lowering interest rates, depending on the individual bankruptcy plan. Chapter 13 bankruptcy is often the best way for a homeowner to stop foreclosure, since it can free up money to pay for the mortgage.

The "Great Recession" of 2007-09 that saw the housing market collapse is technically long over. And the housing market has shown signs of improvement. That doesn't mean financially hard times are over for Ohio homeowners or that conditions have improved for everyone. Such people may wish to explore bankruptcy as an option.

Because filing for bankruptcy is an important decision and involves a myriad of issues, people attempting to save their home from foreclosure should consult with an experienced bankruptcy attorney to discuss their options.