Serial Bankruptcy Staves Off Foreclosure
De Mauro is not alone. Thousands of homeowners across America are turning to Chapter 13 bankruptcy -- which instantly calls off creditors -- to save their homes.
"I sincerely want to work this situation out and get back on track and save my home,'' De Mauro wrote to Pinellas County court officials. "I have two children and do not want to be put out of our house and on the street.''
It may be a drastic strategy, but it's an effective one. That's because Chapter 13 stops creditors in their tracks with an automatic stay. Once you file, creditors are not allowed to foreclose on your house, garnish your wages, empty your bank account, or cut off your utility service. They can't even repossess your car.
Some people use Chapter 13 bankruptcy as a way to buy time when they are behind on mortgage payments and are about to be foreclosed on. By doing so, they can buy as much as five years to catch up on their payments. Bankruptcy can also give people more time to try and sell their house before foreclosure proceeds. But for people like De Maura, it simply buys time to figure out a way to remain permanently in the family home.
In Pinellas County, FL, where De Mauro lives, almost half of the 1,009 people whose homes were scheduled for auction in January and February still had ownership at least a year after foreclosure proceedings began. Another 155 had retained ownership at least two years, 19 for three years and four homeowners for six or more years, according to the St. Petersburg Times.
Other counties across the nation are reporting similar numbers, and that's especially no surprise given the growing number of homes with negative equity. First American CoreLogic reported that 2.2 million properties in Florida alone have residential properties with mortgages that are underwater, or 48 percent of the state's mortgages, ranking it third behind Nevada and Arizona.
In De Mauro's case, court records obtained by the St. Petersburg Times show how he and his wife "clung to their home for seven years even as the amount they owe grew from $84,600 to $101,856 because of late charges."
"We have strived to work things out the correct way and not go the easy route of bankruptcy,'' De Mauro wrote to the court in 2003.
But in 2004, the De Mauros filed their first Chapter 13 petition just before the house was to be sold at public auction. A judge eventually dismissed the case, but the sale already had been stopped.
Over the next few years, the De Mauros were in and out of bankruptcy as new sale dates were scheduled, according to the St. Petersburg Times. Their 11th and most recent filing came Jan. 25 - a day before the house again was to go on the block.
De Mauro is a serial filer, just like Paul Stenstrom of Palm Harbor, Fla.
Stenstrom says his problems began when he lost his job in broadcasting, and worsened when his wife, Sharon, lost her job after nearly being killed by a drunken driver. After the mortgage holder began foreclosing in 2002, the Stenstroms filed the first of what would be nine Chapter 13 petitions.
Stenstrom and his wife do not want to let go of their upper middle-class status in a community where they are active in church and their three daughters attend good schools, according to the paper. The Stenstroms are optimistic they eventually will be able to repay their loan, which has swollen from $185,400 to $351,143.
Stenstrom knows he is being judged by people who feel he is gaming the system by staying in a house eight years after he last made regular payments. But what he is doing is legal.
For Stenstrom, DeMauros and others like them, the stigma and credit-trashing are a small price to pay for keeping their homes.
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See a list of foreclosures in Tampa on AOL Real Estate
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Sheree R. Curry is an award-winning business journalist who also penned a piece about Bank of America's lending mistakes and one about homeowners who sue their lenders.