The last three years have seen more bankruptcy filings than you can shake a stick at. The question is now what will the bankruptcy trends for 2011 be? Let’s take a look. 

Leverage. It was once a fundamental word for individuals and businesses in this country. Then the Great Recession hit. Suddenly, everyone realized just how close to the edge they were living and struggled to turn things around. Millions of individuals and businesses did not make it and end up in bankruptcy court. In fact, the figures were as large as they’ve ever been.

Surely things would have settled by now, right? Sadly, this isn’t the case. 2011 is the year when we see more problems in real estate, particularly commercial real estate. The issue is resetting loans and balloon payments. In residential real estate, millions of homes are coming due to be reset. Fortunately, the Federal Reserve Bank is trying to head this off by keeping rates as low as possible, the real reason it is suddenly interested in buying $600,000 billion in notes. 

Commercial property is the real shoe that is waiting to drop. The average commercial property carries a mortgage that has a term of perhaps 5 to 10 years. Then a large balloon payment comes due. The accepted course of conduct for dealing with this is to refinance the outstanding loan. This is true for small and big properties alike. The only problem is there is little financing available these days given the hesitancy of banks to loan and the fear of impending doom in the commercial real estate field.

The end result of this is another rough year of bankruptcies. Commercial property owners are going to be filing bankruptcy at rates that are hard to imagine. The hope is residential home owners will escape this given the ultra low interest rates created by the Federal Reserve. Ultimately, we’ll just have to see how things play out and hope that the economy starts revving along to put an end to the misery.