Chicago Bankruptcy Lawyer Blog

Cooler weather isn't the only thing to celebrate about autumn. As usual, lower gas prices have arrived with the crisper air. For the first time in two months, the average price of gas dropped to below $2.50, the Associated Press has reported.

That's about 20 cents less than during the summer and 60 cents less than a year ago - and hopefully prices will continue to fall. Now, you might be wondering what the big deal is about holding onto a couple extra bucks. I realize it's not enough to pay the bills. But it's enough to get me motivated about saving.

Let's say lower gas prices save you $20 a month - and you don't even have to do anything! Now let's see where else you can scrounge up some savings. Let's say you ditch that gym membership, get rid of your land line (you probably rely mostly on your cell anyway, right?) or stop smoking. Any of these three could save you upwards of $40-50 each month (not to mention kicking a cigarette habit, if you have one, will save you health care costs in the future). And these are just a few examples.

Continue reading "Lower Gas Prices Can Be One Step Towards Debt Relief" »

One of the biggest myths about bankruptcy is that it's an easy way out.

Getting out of debt is not a piece of cake, no matter which way you slice it. What sets bankruptcy apart from other debt relief methods is that it truly works. In order to do so, however, it requires dedication, a solid plan and time.

But that's not what some debt relief companies out there will tell you. They'll tell you what they think you want to hear - that they can eliminate your debts virtually overnight, that they'll negotiate with creditors for you, that they can work some kind of miracle. That's because they want to take advantage of your desperation to take your money. Whereas most of us view the recession as a tragedy, scam artists see a golden opportunity - and they seem to populate as times get tougher. In a study by New York's attorney general, four-fifths of online bankruptcy companies turned out to be scams.

It's alarming, but it shouldn't discourage you from getting the help you need to finally achieve financial independence.

Continue reading "Be Wary of Scams When Considering Bankruptcy" »

Big banks don't like to be told what to. So with the news that federal regulators are considering legislation to control overdraft fees, a couple of the financial companies took matters into their own hands.

Bank of America and JPMorgan Chase recently announced that they would reduce the maximum number of overdraft fees - the outrageous penalties banks charge when you overdraw with your debit card - that a customer can incur in a day. Even better, they'll make it easier for customers to choose whether to opt in to the overdraft protection program. Currently, bank customers are automatically enrolled and aren't allowed out except in very special circumstances.

But how much of a difference will it really make? It depends.

Continue reading "Big Banks Revise Debit Card Fees, But Does It Help?" »

When you have a headache, you take Tylenol. When you're cold, you throw on a jacket. When faced with common problems, most folks opt for the most obvious solutions. Except when it comes to getting out of debt.

For some reason, the vast majority of Americans will let themselves suffer for years before they consider one of the most effective, logical solutions to financial troubles - if they consider it at all. I'm talking about bankruptcy.

Many people think of bankruptcy as a last resort - something they'll do when they hit rock bottom. But why let yourself continue on a downward spiral when you could start your journey towards a brighter future right now?

Continue reading "Is Bankruptcy Your Best Debt Solution?" »

It's official. For the first time since maybe the Great Depression, a generation is making less than our parents.

People 54 and younger have seen their incomes decline since 2000, leaving the age group the poorest it's been since the 1970s, according to a report by USA Today. And it's not fresh-faced college grads facing the worst of the pay hurdle. Surprisingly, the hardest hit seem to be folks in their late 20s, early 30s, and 40s - people who have a little to a lot of experience under their belts.

Older workers are actually seeing an increase in earnings, but not because they've somehow managed to escape the effects of the recession. Instead, it's assumed that hard times are forcing older generations to put a hold on retirement. So they continue working into their golden years, and push us younger folks out of the workplace while they're at it.

Combine all this with the latest unemployment rates and you get a pretty depressing picture. But there are two sides to every story.

Continue reading "Younger Generation Sees Smaller Paychecks" »

Since when does a cup of coffee cost $40? Since banks started using debit cards to make profits off their customers.

In the past few years, consumers have increasingly turned to debit cards and cash rather than credit. It makes sense - most Americans are carrying some sort of debt burden and we don't want to keep adding to it. We're tired of shelling out our hard-earned income to creditors; we want to take back control of our money. But banks aren't about to let us find financial freedom without a fight. They've begun capitalizing on this new trend with a little thing they call overdraft protection.

Let's say you use your debit card to buy a $4 drink at your favorite coffee shop. Now let's say you had put your paycheck in the bank a few days ago and, unbeknownst to you, it hasn't officially cleared yet. Your debit purchase will go through without any warning and you won't know that anything has happened. That is, until you look at your next bank statement and see that you paid $44 total for that caffeine fix, thanks to your bank's overdraft protection program.

Continue reading "Even Small Debit Cards and ATM Withdrawals Can Lead to Big Fees" »

If you were going to modify your mortgage, common sense says you'd make it more affordable, right? Well, it seems that some lenders don't agree.

More than half of mortgage modifications have either made no change or actually made loans more expensive, according to this story in USA Today. How? It turns out that lenders are adding late fees, property taxes and other penalties into the principal during the modification process - in some cases, making payments bigger than before.

Of the mortgages modified from the beginning of the 2008 through March 31, 2009, 27 percent were unchanged and another 27 percent were actually made higher.

As you can imagine, this is leading to a shocking number of second-time defaults - up to 40 percent. Many borrowers became delinquent because of pre-existing debts or loss of income from unemployment and they just don't have the flexibility to cover rising payments, even for just a little while.

Despite the federal government's $75 billion initiative, mortgage companies are continuing to do what works best for them - not homeowners.

Continue reading "Some Mortgage Modifications Have Hidden Fees" »

Forget iPhones, jewelry and designer jeans - the latest trendy accessory this fall is a purse with tight strings.

Yes, the nation with a negative savings rate has finally gone frugal. According to a poll taken this spring, 32 percent of the country believes spending less has become a permanent way of life.

We're increasingly growing our own food, opting for carpooling and public transit over our own gas-guzzling cars and choosing thrift store finds over designer duds. We're switching generic for name-brand. We're giving up the little luxuries that come with not-so-little price tags. In short, we're learning to spend within our means.

So with all this newfound savings enlightenment, you'd think that we'd be through with our money troubles. But unfortunately, it's more complicated than that thanks to credit.

Continue reading "Pay Down Debts First to Get the Most Out of Savings" »

Contrary to popular belief, I don't think America's biggest obsession is with cars, Starbucks or American Idol. It's with something a lot closer to home - housing prices.

For the last several years, neighborhoods all over the nation have been in a mass panic over home values. Mine is no exception. When a nearby house goes for sale, everyone grabs a flyer to check out the asking price and compare it to their own properties. I have a friend who checks Zillow.com - the site that "zestimates" your home value - at least once a week. Home values are the topic of discussion everywhere from churches to bars.

As for me, I tune it all out. Why? Because housing prices don't really matter.

Sure, it probably sounds radical, but if you know anything about the stock market, then you'll understand my point. Price is only relevant if you plan to sell today. Like shares in a company, a home's true value is about more than just the current price - it's also about the future. If you plan to stay put for a few more years, chances are that you'll recover much of the value you lost when the most recent real estate bubble burst. If you stay in your house even longer, you'll start to see some gains again.

Continue reading "Why Debt Matters And Home Value Doesn't" »

Fact: Mortgage rates are at an all-time low. Fiction: A lower mortgage is the answer to all your prayers.

The average rate for a 30-year mortgage fell to around 5 percent recently. That's pretty convenient because it means rates won't be adjusting significantly higher, as many have feared, and - if you're lucky enough to be able to refinance - you could significantly lower your monthly payment. But if reduced rates solved everybody's problems, foreclosures would come to a halt, consumer spending would rise and we'd certainly stop worrying about the recession.

No, there are too many other factors. Many of us are still unemployed - or worried about becoming unemployed. We're still dealing with the fallout from falling home values. And, most significantly, we're still in debt. Lots of it.

If you don't change your current situation, relief from lower rates will be short-lived. Mark my words, mortgage rates will go up again. And they'll go down. And they'll go back up. Do you really want your financial security to rest on a seesaw?

Continue reading "Eliminate Debt to Make Most of Lower Mortgage Rates" »

It's a three-day weekend and, in theory, we're supposed to be relaxing. But these are stressful times, particularly here in the Windy City.

For the second year in a row, Chicago has been dubbed America's most stressed-out place to live by Forbes magazine - and it's largely thanks to the economy. Unemployment is at 11%, higher than the 9.7% national average. Property values have fallen fast. And the cost of living isn't exactly cheap.

But while I agree all these factors help make Chicago frazzled, I certainly don't think they make it the only stressful place to live. Just look at the national statistics. About one-quarter of participants in a recent sleep study said they are getting less shut-eye because of the recession, according to Forbes. And more than half the people in a healthcare survey said they are cutting back on medical expenses.

Stressing over the economy makes sense, but it doesn't make life any easier. Being under constant pressure isn't good for your health (and you want to save on medical bills, right?), nor is it good for your finances (I know my biggest shopping sprees happen when I'm having bad days, not good ones).

If your stress-o-meter is overwhelmed by the recession, it's high-time you figured out how to lighten up. And the best way to do that could be lightening your debt load.

Continue reading "Chicago Economy Helps Earn City 'Most Stressful' Title" »

Labor Day weekend is fast approaching but, for many of us, labor has already been on the brain for months. Nearly 10% of Americans are unemployed. Many more are worried we could become unemployed. Some of us are working more than one job just to make ends meet. And I don't think I'm going out on a limb when I say that nearly all of us are feeling underappreciated in terms of payment.

Despite the fact that labor productivity - the amount of work output employees provide per hour - rose at the fastest pace in six years, employers just aren't ready to start giving raises. Instead, they're pumping that extra money back into their suffering businesses. But while you can't really blame a business owner for trying to survive right now, the lack of income takes a toll on the economy. Without higher pay in return for that higher productivity, consumer spending won't be able to increase - making recovery slower and more difficult. It's an unfortunate cycle.

But just because your boss isn't giving you a raise any time soon doesn't mean you have to go without. Why not reward yourself this Labor Day? Give yourself a raise.

Continue reading "Give Yourself a Raise This Labor Day By Reducing Your Debts" »