Chicago Bankruptcy Lawyer Blog

Your credit score is a helpful number to know before borrowing money and could save you thousands of dollars. However, by the time a consumer decides to consider bankruptcy, late payments and other credit issues have typically made monitoring your credit score irrelevant.

A new lawsuit filed in a California federal court is going after Experian and its popular credit score monitoring services. The lawsuit says Experian does not give consumers their FICO score, instead providing them with a similar three-digit number that is unique to Experian and essentially useless, according to The Red Tape Chronicles.

Our Chicago bankruptcy lawyers would like to remind you that many important factors go into calculating your credit score and seeking your calculation from a reputable and trustworthy company is important when thinking about getting loan, buying a home or any other process that may require a credit score. This number takes bad debts, unpaid medical bills, credit cards and foreclosures into consideration with drawing up your credit score. By law, you are able to get a free score report from each of the agencies. While some services, like freecreditreport.com, may not be an awful service to use when trying to rehab your credit, it is not really necessary to pay for such information. And, in other cases, debt repayment agencies often scam those in debt and dealing with debt collectors. Speaking with an experienced attorney can provide you with sound advice about your options.

"It's a classic consumer fraud case," said David Woodward, one of the lawyers who filed the case. "The law is designed to prohibit exactly this kind of egregious advertising practice. ... The defendant is profiting from deception."

The FICO score, created by Fair Isaac Corp., is used by more than 90 percent of lenders, says John Ulzheimer, president of consumer education at SmartCredit.com.

The credit scores offered to consumers at Experian are not FICO scores, according to the lawsuit. Instead, consumers that are signing up for the $14.95 per month service at FreeCreditReport.com get access to Experian's PLUS Score model, a similar three-digit number developed by the company. These ratings are not used in determining credit worthiness.

The National Foundation for Credit Counseling offers these tips for those who feel credit counseling is a service they could use to help them through their financial troubles:

-Check out an agency's Board members. Make sure they're not being paid by the agency.

-How are the sessions handled? Do they counsel over the phone, via the internet or in person? Find a company with the style that is most appealing to you and most compatible with your lifestyle.

-See if the agency will work with your creditors. Some agencies will only work with those creditors who agree upon payment. A legitimate agency will take a holistic approach to solving your financial distress.

-Find out how your deposits will be protected. Ask that the agency for evidence that proves the agency is bonded or insured.

-Make sure that the counseling agency you choose to work with is affiliated with a national body such as the National Foundation for Credit Counseling that insists upon strict quality, financial and ethical standards for membership.

-Don't use a service that requires upfront payments.

Know, too, that debt settlement services will not protect your credit rating. Your credit score will take a hit, often comparable to that of filing bankruptcy, when you sign up for a debt or payment reduction service.

Continue reading "Lawsuit against Credit Score Company Illustrates Pitfalls - Bankruptcy Advice in Chicago Critical to Righting Your Financial Ship" »

The New York Times reported recently that the number of people who have filed for bankruptcy protection in Chicago and throughout the country is down, but it doesn't necessarily mean the economy is on its way to improving.

In fact, experts believe that bankruptcy numbers simply indicate that lenders are being more generous with extending lines of credit to people in need -- or are slower to foreclose or take other action. Generous they are not. These companies prey on consumers who are desperate to pay their bills and it usually sends them spiraling deeper into debt.

If you are looking for a fresh start, a clean slate and a refreshing end to creditor calls, filing for bankruptcy in Illinois may be a strategy to explore. Chicago Bankruptcy Lawyers have helped countless numbers of Chicago homeowners and consumers who have fallen behind on house and credit card payments. Using the laws that the government has established long ago to help consumers recover and move forward, these people have been able to put debt behind them.

According to the news article, there were 120,623 bankruptcy filings in June, which were down from 122,775 in May. That's about a 6 percent drop from month to month. But for the year, there will likely still be more than 1.5 million bankruptcy filings by consumers nationwide.

Experts believe that a drop in numbers doesn't mean the economy is healthy or that consumers are better off than they were in 2010. Rather, access to credit has improved and people can rely on credit cards and other loans to get them through a rough period.

"There is a lot of mythology about what drives bankruptcy rates," said Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy. "But consumer credit appears to be the most significant indicator."

Lawless predicts there to be about 1.46 million bankruptcy filings this year. That compares with about 1.56 million in 2010 and 1.45 in 2009. Filings surpassed 2 million in 2005, when many people rushed to file before a new law went into effect that made it more difficult, and more expensive, to file for bankruptcy. But the numbers still remain very high.

This year, 70 percent of consumer filings were Chapter 7, which allows people a fresh start by eliminating debt.

About 27 percent of filings were Chapter 13, which allows people to keep large assets, such as cars and a home, and set up a payment plan over three to five years to make payments.

Chicago Bankruptcy Lawyers are prepared to handle either type of case or explore other debt solutions for our clients. But consumers must take the first step and set up an appointment. A free consultation is needed in order to assess the consumer's financial well-being, outstanding debts, earning potential and overall situation.

Continue reading "Bankruptcy Filings Are Down, but Chicagoans Seeking Help in Record Numbers" »

One of Chicago's post popular websites for food enthusiasts in Chicago is now on sale for at least $40,000 after one of its founders filed for Chapter 7 bankruptcy protection in Chicago.

The Chicago Tribute reports about recent developments in the beloved website LTHForum.com, a message board with hundreds of thousands of posts from reviewers, tourists and residents of Chicagoland who bring their opinions about the cities many dining options.

As is common with Chapter 7 bankruptcy filings, those in debt are able to sell off assets to pay creditors and become free from debt. Chicago Bankruptcy Attorneys are well-versed in these matters and are available to discuss the options 24 hours a day.

In the case of LTH Forum, it's bizarre that a website with no advertising and membership fees and free from fancy graphics has commanded an opening bid of $40,000. But, when it comes to online properties, traffic and popularity are king. The founder filed for bankruptcy in 2010 after debt began piling up.

In 2007, the founder borrowed money from another LTH member, yet never repaid. He was sued in 2009 and filed for bankruptcy protection in 2010. LTH Forum was listed as one of his assets and therefore is being put up for sale. The first bid was made by three other members who said they want to keep the site going as is.

In 2010, 64,168 people filed for bankruptcy in U.S. Bankruptcy Court for the Northern District of Illinois, which includes Chicago, according to the American Bankruptcy Institute. That's up more than 200 percent from 2006, when 20,052 people filed.

It is common in Chapter 7 filings that assets will be sold so that the person with the debt can pay it back. It's the most common form of personal bankruptcy and can help people who don't have many assets, but who continue to deal with credit card, medical bill and other forms of debt over the years.

It's possible that a person's debts can be paid off in just a few months, depending on the case. According to the Bankruptcy Code, a Chapter 7 case starts with a petition, a list of assets and expenditures and income in the bankruptcy court nearest to you. A trustee is appointed to start the process of figuring out what assets are available to be sold and determining how to pay off creditors.

While this sounds like a complex process, it is more common that a petitioner has few assets worth selling -- in many cases it's even possible to keep your house and car. Even if you're not sure, use our free personal debt analysis to help determine if this is the right avenue for you, your family and your finances.

Continue reading "LTH Forum For Sale As Website Founder Goes Through Chapter 7 Bankruptcy in Chicago" »