Although San Diego-area default notices dropped last month, foreclosures jumped in the San Diego region, giving mixed signals to struggling homeowners.

Translation: Foreclosures happen at the end of the game, usually several months after default notices have been issued. The banks' first step is to send default notices to homeowners.

The fact that default notices are slowing down could indicate that lenders may be more open to debt negotiation. Or, it could simply mean that the housing market is improving. More foreclosures can lead to greater activity in the housing market, where bargain-seekers scoop up lower-priced homes.

It certainly appears that way. The number of homes listed for sale in San Diego is down sharply, according to a survey conducted by John Burns Real Estate Consulting. The current San Diego housing supply would last four months or less, according to the survey. A six-month supply is considered equilibrium between the buyers and sellers.

It is very possible that the increase in the availability of foreclosed homes has made housing affordable for many, once again. With the influx of foreclosed homes on the market, perhaps current homeowners are hesitant to list their properties on the market, for fear that their properties might be grossly undervalued.

Or maybe, they're just waiting for home prices to go back up.

What effect, if any, would the drop in default notices have on San Diego bankruptcies? What trends can San Diego bankruptcy attorneys anticipate?

"There's a close relationship between high levels of household debt, including mortgage debt, and bankruptcy filings," said executive director of the American Bankruptcy Institute Samuel J. Gerdano.

In light of this statement, San Diego bankruptcy attorneys may soon see their work shift from drafting bankruptcy petitions to doing more debt negotiation with lenders. Indeed, if lenders are appearing more amicable, why shouldn't homeowners take charge and lower their debt?