Chicago Bankruptcy Lawyer Blog

A recent Wall Street Journal article looks at deficiency judgments, which are court orders that banks can get to force homeowners to pay the difference between what the home sells for and what remains owed on the loan.

This is a terrifying prospect. A homeowner loses his or her job and is forced to stop making payments on a home they want to keep. The bank is unwilling to modify their mortgage, so they're stuck.

Without notice, some months later, they get a phone call or a letter. It's the bank telling them a judge signed off on a deficiency judgment against them. This is after the bank took back their house, sold it at auction for significantly less that what was owed, and now wants the difference in the loan paid to them.

This is happening with great frequency as banks are unable to cope with the losses from home loans gone bad nationwide. There are millions of homes in foreclosure and the losses for banks are staggering. But there is a solution -- bankruptcy in Chicago.

Under certain forms of bankruptcy, there are ways for people to hang on to their main house even if a vacation house is in foreclosure or has already been sold by the bank. Chapter 13 bankruptcy allows for people to make payments over a three to five year period in order to discharge all the money they owe. Other forms of bankruptcy allow all the debt to be removed without making payments.

Consult with an experienced Chicago bankruptcy lawyer if you find yourself in this position. Getting out of debt can be a monumental challenge and it's one that can't be tackled alone.

As lawyers have noted, banks have become more and more aggressive in seeking deficiency judgments. Rather than working with homeowners or cutting them some slack because of tough financial times, the number of deficiency judgments has actually spiked this year as foreclosures have increased. With real estate numbers slow to improve, analysts say it's likely that this strategy will continue to play out for banks who are seeking to get back as much money as they can after the market's collapse.

There are 40 states and the District of Columbia that allow lenders to sue borrowers for mortgage debt lingering after a foreclosure sale. Experts believe banks will use these laws to their advantage as their own companies continue to struggle financially with the rise of foreclosures nationwide. Most banks won't say why they choose to seek deficiency judgments against borrowers, but some say they do it when they suspect borrowers have stopped paying because of a loss of value, not because they can't afford payments.

But one strategy for these borrowers is to consider bankruptcy. If a consumer gets hit with a deficiency judgment, they can file for bankruptcy, which stops lenders from coming after them for that debt. By discharging that debt, the borrower can get away from a six-figure judgment hanging over their head.

Continue reading "Homes Can Be Foreclosed, But Banks Can Come After You For Difference Without Chicago Bankruptcy" »

A recent Forbes.com article lays out how a person could go about getting a credit card even when he or she has no credit established.

The article seems to be aimed at college students or immigrants who have never obtained credit before. But what it fails to reveal is that credit card companies have traps -- hidden fees, late payment fees, high interest rates and other built-in policies that can ensnare inexperienced consumers.

This can lead to debt problems that can be difficult to repair. Damaged credit in Chicago is a difficult thing to fix because after years of minimum payments and high interest rates, the amount of debt just keeps piling up and credit scores keep plummeting.

Chicago bankruptcy lawyers have seen how credit card companies through the years have hammered their customers with fees and penalties that lead them deeper and deeper into debt. Obviously, credit plays a large part in the nation's economy. Without it, people wouldn't be able to buy houses and cars, or start businesses. But it can also be very dangerous.

For many college students, having no credit is a starting spot to getting credit. They are getting by on minimal income and need to be able to qualify for renting apartments and making purchases that are more expensive than the cash in their bank accounts.

Credit card companies have hired smart marketing people who try to appeal to college students. They offer "perks" and can sometimes get universities and colleges to team up with them so that spending money gives them credits at book stores or campus restaurants. They try hard to appeal to college students, who don't understand the problems that can linger if credit card habits get out of hand.

Forbes offers some tips to college students who are looking to get their first credit card:

-Make sure the credit card actually reports credit. There are prepaid cards that are attractive to students who don't want to get trapped with credit damage, but they may not report credit, which don't help your credit score. Other cards charge fees, but will help a person establish credit.

-Some cards offer perks such as a small percentage of cash back for paying a bill on time, an incentive that can lead to improved credit scores.

-Getting a co-signer will also help your credit, but it puts the co-signer, sometimes a relative, on the hook if your mess-up. Your poor credit can affect their credit.

Credit cards can be helpful for college students and young consumers who want to try to build their credit, but if not harnessed, they can lead to poor credit in a hurry. Even a person who has spent years of building up strong credit scores can have those toppled when late fees and hidden fees start getting reported by the credit card companies to the credit agencies.

They must be used cautiously and consumers must do their homework when deciding which card to choose. Find out about the different types of fees, how much they are, when they're assessed, and what happens to interest rates if a payment is made late.

Continue reading "Even Mainstream Media Encourage Chicago Consumers to Get Tangled in Credit Cards" »

A recent Fortune Magazine article looked at how underemployment has turned into an advantageous thing for many jobless Americans.

While finding any work right now is a good thing, consumers who are jobless and struggling with debt may consider filing for bankruptcy in Chicago while taking on a part-time job.

If you are struggling to find work and the bills are piling up, you're behind on payments, interest rates are rising and credit card fees are keeping you down, consulting with an experienced Chicago bankruptcy lawyer may be a good option for you.

Under bankruptcy laws, people who have no income or only slight income can qualify under Chapter 7 bankruptcy, where they are able to clear out all of their debt by going through the bankruptcy process.

In most cases under Chapter 7 bankruptcy in Chicago, a consumer doesn't have to lose any assets in order to qualify and reap the benefits of this bankruptcy law. This is the most commonly filed form of bankruptcy because it is a way for consumers to discharge all their debts without paying anything back.

Chapter 13 bankruptcy, however, is considered the wage earners' form of bankruptcy. This is for people who make enough money to be just out of the reach of Chapter 7 bankruptcy.

They may have large assets, such as a house and vehicles, that they want to keep and not be forced to give up in a bankruptcy proceeding to pay off creditors. They can still get rid of most of their debt through this form of bankruptcy.

Instead of having the debt discharged outright, they must set up a payment plan over 3 to 5 years. After those payments are made -- assuming no late payments -- the remaining debt is discharged.

This is where the article about underemployment comes in. Underemployment is defined as when a person who is overqualified to do a job does it anyway just to make some money, or if they work part-time jobs in order to work their way up to a full-time job.

The Fortune Magazine article suggests that because unemployment is high and jobs are scarce that people consider underemployment as a way to get back on their feet financially.

A recent query by a columnist found that using temporary work can be a stepping stone to a permanent job. This could be the first step in learning a new skill set and work your way into a new career field. Some people have considered taking college classes to learn a new skill.

The worst thing a person can do is simply give up, the report points out. Rather than stopping their search for a well-paying job, they may take a detour and still get to where they want to be.

Bankruptcy is a strong option for certain people in this poor economy. If you are in a position where you were previously making good money but had to take a lower-paying job because of layoffs, this may be a good time to consider bankruptcy in Chicago. With a lower annual salary, you may qualify for Chapter 7 bankruptcy and be able to discharge your debts and keep your assets.

Continue reading "Being Underemployed, Coupled With Chicago Bankruptcy, May Make For a Brighter Future" »

The Illinois case of two brothers charged with bankruptcy fraud shows the dangers of not following the complex rules of the court. This potential for fraud could be equally tempting for someone filing for Chapter 7 bankruptcy in Chicago.

In United States v. Persfull, two brothers were sentenced to 30 and 39 months in prison, respectively, for lying to a bankruptcy trustee.

This case highlights just how important it is to communicate openly with your Chicago bankruptcy lawyer in a bankruptcy case. While bankruptcy allows consumers to reap the benefits of having debts discharged, there are specific rules that must be followed. It is a complex process that must be handled by a skilled lawyer.

Because bankruptcy is a federal process, bankruptcy fraud is a federal offense, punishable by five years in prison, a fine or both.

According to U.S. Code Title 18, Chapter 9, Section 157, bankruptcy fraud occurs when someone files a fraudulent bankruptcy petition, files documents in a bankruptcy case that are fraudulent, or makes false or fraudulent representations in a bankruptcy case.

In Persfull, one brother, from Poplar Grove, filed for bankruptcy in 2003. Because his mother was ill and possibly close to dying, the bankruptcy trustee asked if the one brother would be getting an inheritance from his mom if she died. The trustee told him that if he did acquire any assets, that he was required to report it to the court.

On the day his debts were discharged through bankruptcy, his mother died, leaving him and his brother, from Rockford, with equal shares of her estate. The brother filing bankruptcy signed a disclaimer of his interest, but never told the bankruptcy trustee about the inheritance.

More than a year later, the trustee discovered that the man had inherited property from his mother's estate and saw that he and his brother had conducted a series of transactions. The U.S. Attorney's Office began investigating and eventually filed criminal charges.

According to court documents, the brother filing for bankruptcy had received two loans from his brother, one that allowed him to retire the mortgage on his primary residence and another that allowed him to buy a car and put money into a stock trading account.

He said he assumed they were just loans from his brother and had nothing to do with his inheritance. At trial and on appeal, the brothers claimed they were not attempting to defraud the government and their creditors, but rather were simply acting on brotherly love.

But they were convicted and sentenced to prison and on appeal, a court ruled that they were, in fact, guilty of bankruptcy fraud.

If you find yourself filing for bankruptcy, we urge you to be honest and keep an open line of communication with your Chicago bankruptcy lawyer. A skilled lawyer will help you not only avoid these serious charges, but also maximize the amount of debt you can eliminate.

Continue reading "Chicago Bankruptcy Case United States v. Persfull Shows Dangers of Fraud" »

It used to be that consumers had to watch out for frauds who wanted to steal their money by trying to scam them by letter or phone. Nowadays, consumers must be even more vigilant, what with the ever evolving digital world of mobile banking and other money related online transactions.

A recent ABC News article details how cybercriminals are using commonly used programs and websites like Facebook to steal money from consumers.

Some victims of cybercrime in Illinois have considered filing for bankruptcy in Chicago. These con games and bogus schemes strip people of their security -- and money -- sending them spiraling into a financial mess.

Even if a person is a victim of cybercrime, it can take a long time for him or her to recover. An experienced bankruptcy lawyer in Chicago can work with troubled consumers to ensure they evaluate all options before filing for bankruptcy.

Cybercriminals are becoming increasingly inventive on how to steal from consumers. While that may seem like a compliment to those committing illegal acts, it is a word of warning for everyone to do a better job of securing their funds.

The ABC News article states that hackers are using text messages and emails to obtain a person's phone number. They then plot a scheme whereby they assess and attempt to collect small fees from those stolen phone numbers, which can go unnoticed by the phone's owner.

Gone are the days when a thief would need a person's credit card number or identification to steal from them. They can now use malware and viruses to steal right from underneath a user's nose.

For those who use online sites to store credit cards, hackers can access that information, cost users and the websites big bucks if they pluck a few at a time. Consumers may not notice or they may be complacent enough not to go through customer service to fix it if the loss is small.

Hackers will use video or web links with outrageous headlines to try to get people to click, which can then lead them to the information they need to begin the hacking process. Android users, whose marketplace is more open than Apple users, may be at a heightened risk of hacking because people can create realistic-looking applications that are actually viruses.

To stay safe, follow these tips:

• Check to see what authorizations you are giving to a website, Facebook program or other online process.


• Don't bank online except through secure, official sites.


• Check phone bills regularly.


• Don't download applications from unknown sources.

The bottom line is this can be a major source of income for thieves. Corporations and consumers lose tens of millions of dollars per year on cybercrime, so it is critical to take proper steps to shield yourself against it.

Being a victim of cybercrime can send your finances into ruin. You may want to consider bankruptcy in Chicago to eliminate debts and get you back on your feet. Bankruptcy helps many people, but it isn't right for everyone. Consult with an experienced bankruptcy attorney to see if it may be the solution for you.

Continue reading "Cybercrime Can Lead Consumers into Chicago Bankruptcy" »

Banks may at first appear so inviting. Their lobbies are pristine, and their commercials show white-toothed, oh-so-friendly tellers welcoming in customers. It's like being in Disney World.

And then you fall behind by a payment and guess what? They turn into sharks. You get slammed with hidden late fees and they're quick to send collectors hounding you if you owe them money.

It's often these aggressive actions that lead people to seek bankruptcy protection in Chicago and surrounding areas. The bankruptcy process allows for a fresh start after years of debt piling up. Meeting to discuss your situation with an experienced and knowledgeable Chicago Bankruptcy Lawyer can be the first step in saving yourself from years of frustration in the future.

CNNMoney recently chronicled an issue among mourners who are being hounded by banks over the debt of deceased loved ones. Banks are seeking to give them "opportunities" to assume the debt of relatives who have recently died.

By one woman's account, she was sent a letter from a bank within weeks of her mother's death. They offered her a rate of 0 percent APR for the first six months, only to have the rate jump to 13.2 percent after that to pay off her mother's credit card debt. Social Security provided the bank with the information.

While insensitive, banks are well within their rights to collect debt, whether from a relative or from the estate of the person who died. So, if you think you can max out your credit cards before you die and the debt will go with you to the grave, you're wrong. Banks are cut-throat about these things and will go after your family members after you've died.

Another woman was called 48 times a day by a bank debt collector within days of her husband's death. During the wake, an answering service was set up so family members could listen to friends calling to wish condolences. Instead, they heard an automated caller every 15 minutes seeking payment on debts and threatening foreclosure.

In community property states, which Illinois is not, assets acquired during the marriage are considered jointly owned and therefore debt on them will be the responsibility of the surviving spouse. In other states, spouses likely won't be liable for their deceased loved one's debts unless they co-signed on a loan or have debt on a joint account.

The Federal Trade Commission has a mandatory "cooling off" period after death that was recently imposed, but that applies to third-party collection agencies and not banks, which are regulated on a state-by-state basis. That means it may be possible for banks to harass a widow or widower the moment they find out the person owing money has died. It's this kind of heartless action and the other aggressive tactics banks take that lead people deep into debt.

Bankruptcy protection offers protection to consumers. One great benefit of bankruptcy is it immediately stops a creditor or bank from calling. They are banned from communicating with you while you go through the bankruptcy process, as you attempt to get your affairs in order.

For many people, at the end of the bankruptcy process, they will come away without any outstanding debts and no more money-seeking callers. Wiping out debt and being able to move forward without the nagging calls, e-mails and letters can be a refreshing and rewarding feeling.

Continue reading "Banks Hound Mourners over Chicago Debt After Loved Ones Die" »