Chicago Bankruptcy Lawyer Blog

A recent poll by the financial data publisher Bankrate.com indicates that 24 percent of American consumers have no emergency savings, The Associated Press reports.

It's not an entirely shocking statistic, but it is concerning. Those without savings are flying by the seat of their pants, especially in this rocky economic climate because job loss is a very real prospect for many in Chicago. A lost job without much of a back-up plan can lead to consumer debt, which can pile up without notice.

This type of bad fortune, coupled with necessary spending, can lead to bankruptcy in Chicago. While to some that may sound like a devastating outcome, others see the intrinsic value in the process and its outcome. But hiring an experienced Chicago Bankruptcy Lawyer is essential to navigating the complex bankruptcy codes.

The story suggests that only 24 percent of people have the recommended cushion of at least six months' expenses set aside for emergency situations. Most people aren't prepared for contingencies and another 24 percent have no emergency savings at all.

About 6.2 million people are out of work for half a year or longer and the poll results show that people are woefully unprepared for a time when job security and the economy are such concerning topics.

"The majority of Americans still have much work to do in building an adequate emergency savings cushion," Greg McBride, senior financial analyst for Bankrate told The Associated Press.

McBride said the survey's results were surprising given that so many people have seen the effects of the 2007-2009 recession and haven't planned for emergency savings. Yet, the challenges of the economy have made it difficult for people to store away money.

Respondents under 30 with annual incomes under $30,000 were most likely to report having no savings at all. Those likeliest to have six months of expenses in a fund were higher-income households and people in their 50s and 60s.

Less than half of those who participated in the poll had about three months of expenses, which was the same figure as a 2007 poll. Other findings:

• Feelings of financial security declined slightly to 97.8 in June from 98.5 in May. A reading under 100 shows how less financially secure people are feeling compared to a year ago.
• About 26 percent of those polled said they were comfortable with their debt compared to a year ago, while 19 percent say the opposite.

Let's face it -- it's much easier to build up savings when you're an executive for a Fortune 500 company, a doctor, lawyer or engineer making a six-figure salary. But most people aren't in that boat. The cost of raising children, no raises, pay cuts and the unexpected flat tire or water heater that goes out adds up and it's just difficult to keep up with bills.

Toss in a lost job, freak accident causing hospitalization or predatory lenders who slam consumers with fees and interest, and it's easy to see why people fall into debt the cannot handle.

But the collection calls can be stopped and it can be done through bankruptcy. Chapter 7 bankruptcy, by far the most popular form of filing, allows people to consolidate their debt and have it discharged, making for a fresh start financially.

Continue reading "1 out of 4 Chicago Consumers Have No Emergency Savings Plan" »

Recent statistics from the American Bankruptcy Institute indicate that the number of people seeking bankruptcy protection in Chicago has remained consistent in 2011.

Chicago Bankruptcy Attorneys have helped countless people get a fresh start on life by attacking credit card, medical bill or other debts through bankruptcy laws. Filing for bankruptcy in Chicago has been a plan many Americans have considered as our national and local economies have gotten shakier in recent years.

The state unemployment rate sits at 9.2 percent, according to the Illinois Department of Employment Security. The department reports that numbers are slightly worse in the Chicago-Joliet-Naperville metropolitan area, where nearly 10.4 percent of people -- about 430,000 -- were looking for work in June.

For many of these people, they are unemployed through no fault of their own. A company losing work and being forced to cut positions, often has to let go some of its most experienced and loyal workers.

And for those who get cut, sitting in the unemployment line or having to rely on credit cards to pay bills can be devastating. It doesn't take long to run through a savings account, for those who have any kind of money stored away.

And then they find themselves considering bankruptcy to recover from the debt they have amassed in such a short time. Creditors start calling, lenders email and call friends and former co-workers; not only is it an embarrassing situation, it can add a lot of stress to a family.

But according to the bankruptcy statistics, many people have begun seeking refuge in the federal bankruptcy laws that were established to help people in such a situation. Illinois is broken down into three districts for bankruptcy -- the Northern District, Central District and Southern District.

The Northern District runs from Will County in the south west to Whiteside County and includes Chicago and Cook County. The Central District contains Peoria, Champaign-Urbana and Springfield -- it is the largest geographically. The Southern District runs from Cumberland and Clark counties south to the Kentucky state line.

The Northern District, including the population of Chicago, consistently has the most filings. In the first two quarters this year, there have been 15,020 and 15,318 filings each quarter. Recent filings peaked in the second quarter of 2010, when 16,768 people filed for bankruptcy. To put things into perspective, only about 6,700 people filed in this district in each of the quarters in 2007.

Filings in the Central District rose slightly in the second quarter, from 2,235 to 2,469. In the Southern District, they were consistent -- 1,359 to 1,390 from the first to second quarter.

The numbers are significant because it shows the many people who are considering Chapter 7 Bankruptcy in Chicago and throughout Illinois. This process allows consumers to discharge most or all of their debt by going through the bankruptcy process.

It requires the navigation of an experienced Bankruptcy Attorney, but it allows people to get a fresh start at life by being able to breath freely without the threat of creditors and lenders constantly hounding for payments. It means moving forward and seeing a bright future.

Continue reading "Second Quarter Bankruptcy Filings Remain On Pace in Illinois" »

A story by CNNMoney reports that new home sales in Chicago and nationwide fell again in June for the second straight month, continuing concerns that the real estate market has yet to fully recover from the Great Recession.

Falling home prices have left many people with mortgages on houses that are upside down in Chicago looking for answers. One answer is filing for bankruptcy in Illinois. Bankruptcy laws allow the foreclosure of a home to immediately stop, stop creditors from calling and wages from being garnished.

The story reports that 312,000 homes were sold in June, which was down from 315,000 in May. The June numbers are actually up 1.6 percent from June 2010, however. But despite the uptick from 2010, economists predicted 320,000 sales.

With a flood of foreclosed homes on the market, new home sales have been one of the weakest sectors of the economy. In July 2005, there were 1.4 million new home sales, the peak. After June's sales, there are 164,000 new homes on the market, which experts believe will take more than six months to sell through that inventory.

According to the S&P/Case-Shiller report, home prices increased about 1 percent in June over May. In Chicago, prices rose 1.7 percent from April to May, but prices are still down about 8 percent from 2010.

Prior to the last few years, buying a home seemed like a good investment. It was considered a good form of bad debt, like student loans, because it was likely it would pay off in the long run. Well, the long run is much longer in just about every part of the country.

With millions of houses in foreclosure, on top of new homes that are being built, the inventory in this country is massive. And the foreclosures have sunk home values. Six-figure houses are now selling for five figures because of the collapse of the market.

And that has trapped many homeowners in their homes, which are now worth much less than the mortgage they are paying. For some, the bad job market, coupled with an expensive house payment, has left them unable to manage.

But there is hope in bankruptcy laws. Whether a house is scheduled to be sold on the courthouse steps tomorrow or if the homeowner has just recently begun missing monthly mortgage payments, bankruptcy can help.

Filing for bankruptcy immediately stops the foreclosure process. It also stops creditors from calling, collection agencies from harassing you and lenders from attempting to garnish a person's wages. The consumer gets protection throughout the process, until a final order is signed.

There are different forms of bankruptcy, however. In Chapter 7 bankruptcy, the most common, debts are forgiven. But this requires passing a means tests to determine how much money a person has and can make.

In Chapter 13 bankruptcy in Chicago, large assets, such as a home, are protected and consumers set up a payment plan, usually over 3 to 5 years, to pay back debt. Which chapter the bankruptcy is filed under depends on the person's circumstances.

But the first step should be consulting with a Chicago Bankruptcy Lawyer, who can assess your situation and determine the best course of action. Bankruptcy laws are designed to give consumers a second chance and they can provide much-needed relief when people believe they have nowhere to turn.

Continue reading "Chicago New Home Sales Slip In June Making Bankruptcy a Good Option" »

Now that lawmakers have "solved" the debt crisis by adding to it by a few trillion dollars, it may be a good time to take a look at our own finances. Most people don't have the power to add a few trillion dollars to their own debt ceiling, so let's look at some other alternatives.

Forbes.com recently published four tips to working on your personal debt. Credit card debt and other lines of credit have sent people into debt that is often unmanageable.

Filing for bankruptcy in Chicago, however, immediately stops creditors from harassing consumers and allows them a fresh start. But the process is complex and is best handled by an experienced Chicago Bankruptcy Lawyer.

Job loss, unexplained medical bills and predatory lenders are some of the biggest reasons people consider filing for bankruptcy in the first place. So, making sure you are able to climb out of debt is smart. However, it may not work for everyone.

Here are some tips to improve your finances:

Attempt to refinance your debt at a lower interest rate: Interest rates are nearing record lows, so it may be possible to transfer debt from a high rate balance to credit cards with low or even zero interest. Be careful about expiring deals, though.

Other options include borrowing from home equity and retirement plans, but those have pros and cons, too. You're putting your home on the line if you can't pay through home equity loans; while credit checks aren't required for retirement plan loans, you may be in line for a tax hit in the future.

Determine where you're spending and try to cut back: Cuts, cuts, cuts, seems to be the mantra in Washington D.C., but they rarely do it. Take a look at your personal spending over three months of bank and credit card statements. See how much you spend on eating out and entertainment. Try cutting back.

If you believe you're as thin as possible, prioritize spending. Pay house bills, food, utilities and transportation. It's better to be late on a credit card payment than being evicted or having things repossessed. Try to spend less than you take in.

Pay down debt: If you have a little extra left at the end of the month or you get a bonus at work, don't blow it on a fancy dinner or a new dress. Pay toward what you owe and the balance that has the highest interest rate. After one balance is paid off, go to the next.

For those having trouble making minimum payments, creditors may be open to working out a payment plan. However, they sometimes are difficult to work with and Forbes suggests considering bankruptcy.

Stick to a "balanced budget amendment": Track your spending on a monthly basis to determine what you're spending and have the resolve not to go above that. Break up spending into monthly increments and take irregular spending, like vacations and holiday shopping, and break it down into a monthly cost.

Try to save up three to six months of expense dollars in an emergency fund. If there are months where you spend less, put the money aside. And consider giving yourself an allowance that you won't go over for food and shopping.

These are all good tips, but they don't apply to everyone. Many people are hurting and aren't able to take all these steps. For many people, they feel so overwhelmed with debt, they can't comprehend having money left at the end of the month for savings. For these people, filing for bankruptcy in Chicago may be a good option.

Consulting with an experienced Chicago Bankruptcy Lawyer should be your first step if you're in this position. There may be other options besides bankruptcy, but getting sound advice is necessary. Call today.

Continue reading "Tackle Your Chicago Debt Ceiling Without an Act of Congress" »

The Obama Administration recently announced that it wouldn't allow lenders to foreclose on unemployed homeowners until they miss more than a year of monthly house payments, The Washington Post reports.

While this is temporary good news for homeowners, it's more of a stopgap measure than a real solution. The Federal Housing Administration previously required banks to allow its borrowers to put off mortgage payments for four months while lenders worked out options to keep people in their homes. The national unemployment rate was 9.1 percent in May, while it sits at 8.7 percent in Illinois.

Chicago Bankruptcy Lawyers have seen many desperate homeowners, especially those who are unemployed and scrambling to keep their houses, seek out home loan scams and other programs in the hopes of keeping their homes. But as people remain unemployed, their credit card debt typically increases, leading to extended debt. Some homeowners consult with experienced bankruptcy lawyers and conclude that Chapter 13 Bankruptcy in Illinois is the best option.

The Treasury is expected to ask lenders for a similar deal under its primary foreclosure prevention program, but it lacks authority to require it. As many Americans have discovered, bankruptcy can be a much-needed procedure to get ones finances bank in order after debt piles up.

Through June, there were 709,303 consumer bankruptcy filings, which was actually a slight decrease from about 770,000 during the same period a year ago. But the 119,768 filings in June represented a 4 percent increase from 114,803 filed in May.

Chapter 13 bankruptcy in Illinois means consumers are able to come up with a payment plan that lasts three to five years and allows people to keep their homes if they complete the payments on schedule. People often think of bankruptcy in terms of chapter 7, which is designed for people with few assets and mounting debt; their debts can be consolidated and wiped out through a successful bankruptcy procedure.

Chapter 13 is different because it helps people who have assets, but who have gotten into trouble with mounting debt. As soon as a person files for bankruptcy, creditors stop calling, collection agencies aren't allowed to bother you and your Chicago Bankruptcy Lawyer takes charge and begins working on your case.

This is a complex process and requires a law firm that has helped countless homeowners struggling with debt. Costly medical bills are the number one reason for bankruptcy and with our economy dragging and not producing as many jobs as expected, unemployment is at the top of the list of reasons why a person might consider to file for protection.

Bankruptcy law is designed to help consumers who are serious about fixing their debt problems. It is one area of law that provides protection for consumers and lets them work through their debt in order to move forward.

But keep in mind that the sooner you take action, the sooner you'll be able to get rid of the mound of debt that is causing problems in your life. So, while the President's plan to give unemployed homeowners some extra time off from making payments may help some, high unemployment rates may make it near impossible to get out of debt and keep one's home. But filing for bankruptcy is the one definite way to stop creditors and work to keep your home when debt is getting the better of you.

Continue reading "Unemployed Homeowners Get Temporary Reprieve From Foreclosure" »

The Lexington Herald-Leader recently reported about a couple in Kentucky facing $70,000 in federally insured student loans, despite dropping out of school because of family problems and defaulting on the loans.

The couple is now buried and debt, yet haven't filed for bankruptcy. While it's true most student loans cannot be discharged, filing bankruptcy can still help those struggling with such debts. And more help may be on the way to deal with predatory lenders in the student-loan sector.

Lawmakers recently introduced legislation that would allow students to discharge commercial student loans in bankruptcy proceedings, reversing a 2005 law, according to U.S. News & World Report.

Even without the law change, filing for bankruptcy in Chicago is a way to eliminate debt that is causing stress, hardship and frustration. But the first step is consulting with an experienced Chicago Bankruptcy Lawyer who can help explore all options and determine the best avenue for you based on the laws in place.

According to the news report, the national average for a three-year default rate for 2008 is 13.8 percent, according to federal data. Private, for-profit "career colleges" tend to have the highest default rates because of how expensive tuition is compared to the average salary upon graduating.

While it's possible that some student loans can be considered an "undue hardship" and can be discharged, it requires showing a bankruptcy court judge this is the case. If you are able to work, this can be difficult.

But according to U.S. News & World Report, the law may be changing. With college costs rising and the economic climate getting worse, a change to the bankruptcy law would be helpful for many people.

Both bills introduced in the U.S. Senate and U.S. House of Representatives would restore the ability to discharge commercial student loans in bankruptcy proceedings, reversing a 2005 change to the law for borrowers who find themselves unable to make payments on their loans.

"Before changes were made to the bankruptcy code in 2005, only government issued or guaranteed student loans were protected during bankruptcy," said Sen. Dick Durbin, D-Ill., in a press release. "This protection has been in place since 1978 and was intended to safeguard federal investments in higher education. Today's bill would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005, so that privately issued student loans will once again be dischargeable in bankruptcy."

The law change is particularly crucial in today's economy, where only 56 percent of 2010 graduates were able to find work, according to a study by the John J. Heldrich Center for Workforce Development at Rutgers University.

But even without the law change, if it happens, bankruptcy can be helpful for those struggling with debt that is brought on by student loans. While discharging the student loans can be difficult, filing for bankruptcy can offer the opportunity to eliminate other debt, making it easier to pay back what is owed. Being mired in debt is difficult on anyone and using the laws to protect consumers can provide a fresh start for Chicago families.

Continue reading "Chicago Bankruptcy Can Help Students With Debt Caused By High College Loans" »

Remember when getting a credit card was thrilling and it made you feel like you were getting some new-found freedoms?

Well, now that you're an adult and have seen the destruction these high interest rate cards can cause, you probably don't feel the same way as you did years ago. With the Great Recession mostly behind us, credit card companies are again opening up shop, sending out offers and paying high-profile celebrities to peddle their product.

But should you take the bait? Credit card debt is one of the No. 1 factors for filing bankruptcy in Chicago. They are responsible for people piling up debt that seems never-ending because of high interest rates and hidden fees that ensnare consumers. But there is help and consulting with a Chicago Bankruptcy Lawyer is a good first step.

Data shows that new lines of credit were opened at a 60 percent increase for people with scores below 620 in the first quarter of 2011 compared to 2010, Equifax reports. Banks and credit cards are opening up new lines of credit like they did before the economy crashed, but is that good for you?

The article looks at some tips of how to determine whether or not to jump back into the credit card fray:

• Obtain a credit report so you know what your situation is: Before applying for or accepting credit card offers, see what your score is and repair any errors that may be contained in it. Mistakes can lead to higher interest rates.
• Ask yourself why this is a good idea: Credit cards should be used to show lenders you can handle your card responsibly and repair your credit score. They shouldn't be used for emergencies. A cash fund should be used for that.
• "Preapproved" really just means "prescreened": Preapproval to most companies just is an initial look-see. When you apply, they dig deeper and usually offer higher rates.
• Don't be swayed by the envelope: Flashy signs of free gift cards and perks just for signing up sound great, but read the contract thoroughly. There may be hidden clauses that may make it not worthwhile.
• Be wary of secured credit cards: These work by putting down a deposit and the available credit is based off that. But there can be upfront fees and even charges for customer service.
• Shop around: If one credit card company wants you, others probably do, too. But get the best possible interest rate if you're committed to getting back in the game. Don't be afraid to say no.
• Prepare for the hard sell: Companies will offer services, such as ID theft protection or credit monitoring for "pennies a day," but they may not be worthwhile. You may already have offered protections through insurance policies.
• Consult a non-profit credit counselor: For-profit groups can be a rip-off, but a non-profit group may be able to give you advice about how to handle your debt.

Continue reading "Chicago Credit Card Debt Piles Up, So Should You Get Another Card?" »

A project story by The Associated Press revealed that officials nationwide have found that "robo-signed" documents, which are signed by mortgage servicers without checking the paperwork first for accuracy, are still popping up in foreclosure cases throughout the country, despite ongoing investigations in every state.

Chicago Bankruptcy Lawyers have seen many people put their hopes of saving their home in the idea that there may be a problem with the documentation regarding their home paperwork. And considering all 50 states have ongoing investigations into "robo-signing," fraudulent mortgage sevicers, bank attorneys and bank officials, it's not a shock. But the only fool-proof way of stopping a Chicago foreclosure is by filing for bankruptcy.

While this may not be a solution for everyone, filing for Chapter 13 bankruptcy in Chicago and elsewhere immediately halts the foreclosure process and stops creditors from calling.

The purpose is to allow the homeowner to set up a payment plan, usually over three to five years, to pay off debt and stay in their home. Whether you have just been given notice by the bank that you're in default or your house is scheduled to be auctioned off on the courthouse steps tomorrow, a bankruptcy will stop foreclosure.

According to The Associated Press story, officials in at least three states have discovered thousands of "robo-signed" documents since last fall, suggesting that it is still a widespread problem in the industry. Illinois' Attorney General, along with all 49 other attorneys general, have been investigating financial institutions' use of companies that have signed documents and filed them with courts that aren't accurate but have been rubber-stamped as accurate by other companies the banks hire.

Last fall, the nation's largest banks and mortgage lenders, including JPMorgan Chase, Wells Fargo, Bank of America and an arm of Goldman Sachs suspended foreclosures while they investigated how corners were cut to keep pace with the crush of foreclosure paperwork. Many experts believe a big second wave is coming once banks get their paperwork in order.

Critics say the new findings point to a systemic problem with the paperwork involved in home mortgages and titles, the story states. And they say it shows that banks and mortgage processors haven't acted aggressively enough to put an end to widespread document fraud in the mortgage industry.

While all these problems plaguing the mortgage foreclosure industry may be positive for people trying to stay in their homes, it may not stop a foreclosure. Documents can be corrected, especially when a foreclosure action is brewing. So, if you are banking on bad documents in your mortgage to save your house, you should be consulting with an attorney familiar with foreclosure and bankruptcy in Chicago.

Filing for bankruptcy will immediately stop foreclosure and allow you to work through your debt. Medical bills, job loss and credit card debt are the three top reasons for a bankruptcy and many Chicagoans are facing these challenges today.

Continue reading "Fraudulent, "Robo-Signed" Documents Still Prevalent in Chicago Foreclosure Filings" »