Chicago Bankruptcy Lawyer Blog

When some people consider bankruptcy, they think about going through a process where debts are forgiven and the prospect of having to give up some or all of their property and other assets.

But there is a form of bankruptcy in Chicago that could help people who want to keep their homes, cars and other possessions.

Under Chapter 13 bankruptcy in Chicago, consumers are allowed to have some of their debts forgiven. But they must set up a payment plan that typically lasts between three and five years to pay back some of the debt.

Once the plan is completed, the balance of the debt owed is wiped clean. Chicago bankruptcy lawyers have seen many consumers helped by this form of bankruptcy, as they are able to stay in their house and still have their debts cleared. In many cases, Chapter 7 filers can stay in their homes and keep their debts, too. Each case is different.

One major benefit of bankruptcy in Chicago is that filing immediately stops a foreclosure. This is particularly important when considering our current real estate market both in the Chicago metro area and statewide. Prices are down and foreclosures are up and the values of homes have dropped considerably.

Whether you have missed one mortgage payment, five payments or your house is scheduled to be sold at auction immediately, bankruptcy can help. Simply filing for bankruptcy will immediately stop your house from being taken away.

Once you go through the bankruptcy process, you may be able to regain possession of the house after all is said and done. Chapter 13 bankruptcy can be helpful in certain situations, even if you make some mistakes with your mortgage.

Here are some tips from a U.S. News & World Report article that may help you avoid major mistakes with your house:

Check your credit: Not checking your credit can lead to high interest rates or strip you of the chance to get a mortgage at all if your credit score is below standard. Save yourself time and disappointment ahead of time.

Stick to one loan: Avoid taking out another line of credit while seeking a mortgage loan. This, too, can affect your credit score.

Look at the total house payment: Principal, interest, taxes and insurance goes into your payment. Look at all aspects.

Payment history: Make sure you have a history of making payments on time.

Employment history: Job hopping can hinder your mortgage rate.

Preparation is key: Make sure you get pre-approved before you apply so that you know you will qualify for a mortgage loan.

Shop around: Don't just take the first rate you get approved for. Look at different lenders to find the best option for your situation.

Too good to be true?: Get the best rate, but don't chase any deals that seem great.

Lock your rate: Fixed-rate mortgages are important because those that adjust can cause major problems.

Read your loan documents: Take the time to look at closing documents and don't just assume everything works for you. Ask questions.

Continue reading "Chicago Bankruptcy Prevents Foreclosure, Even if You Make Major Mortgage Mistakes" »

As our Chicago bankruptcy lawyers have discussed on our blog many times, Chapter 13 bankruptcy in Chicago has gained popularity in recent years.

This form of bankruptcy allows debtors to pay back a portion of what they owe over a three- to five-year period. It also protects their assets, such as a house or vehicles. Chapter 7 bankruptcy, the most popular form of bankruptcy, doesn't require payments, but assets are put at risk for liquidation.

Because many working-class Americans have found themselves battling debt due to the failing economy, job loss, rising medical costs and other factors, Chapter 13 has become a more attractive option. If they have valuables they want to keep, bankruptcy filers may be more inclined to attempt Chapter 13. Also, if they have a steady income, they may not qualify for Chapter 7.

A recent case out of Missouri, however, shows that while bankruptcy laws are designed to help consumers, there are strict rules that must be followed. And the complexity of the law requires the skills of an experienced lawyer who can help people through the process.

In Johnson v. Fink, a husband and wife filed for Chapter 13 bankruptcy protection in 2009. Based on Social Security income, as well as income from a pension and two jobs, the agreed amount to be paid was $1,890 per month for 60 months.

But about a year after they filed for bankruptcy, the husband lost his second job, which reduced how much he was bringing in to $1,240. After filing paperwork with the court that revealed they had $935 of disposable income, they asked for an amended plan reducing their payment to $100 per month.

But the trustee objected, arguing that the proposed plan didn't include all of their disposable income. The couple argued that based on other cases, their Social Security income shouldn't be considered when calculating their payment plan. The court ruled that the couple hadn't acted in "good faith" in proposing their plan. They asked for a delay in payments in order to appeal the decision, but the judge denied that motion.

They appealed anyway, but an appeals court sided with the bankruptcy judge. In its order, the court found that "when a confirmed plan is modified to reduce payments...due to a substantial change in financial circumstances, the modification must correlate to the change in circumstances."

The good news here is that bankruptcy judges will allow people to modify their payment plans under Chapter 13 bankruptcy. If they lose a job or have a major event happen in their lives, there is an avenue to reduce payments in order to make things manageable.

This is where a skilled lawyer comes in. A Chicago bankruptcy lawyer should be by your side every step of the way in order to help you get rid of the debt. If you are considering bankruptcy and aren't sure which chapter works for you, contact us today.

Continue reading "Johnson, et al. v. Fink Shows How Chapter 13 Bankruptcy in Chicago Could Be Beneficial" »

A recent look at the most recent bankruptcy numbers shows that there was a drop in filings in the Bankruptcy Court for the Northern District of Illinois during the third quarter.

Most analysts believe that this is because creditors have loosened their standards for handing out credit. As you likely have seen in recent weeks, credit card companies have been hammering away with advertisements promising rewards, perks, and cash back deals. All of these scams are designed to entice people to use their cards and end up indebted to them.

While some people may have been able to avoid the credit card companies' efforts, others may have been trapped during the holiday shopping season. For those who have fallen into the trap and may be stuck with thousands in credit card debt, Chapter 7 bankruptcy in Chicago may be a viable option.

Our Chicago bankruptcy lawyers have helped many clients who are burdened with mounds of debt. The different forms of bankruptcy allow people in specific situations to be helped. If you have assets to keep and don't want them to be subjected to creditors, there's a form of bankruptcy for that. If you have little income and few assets, but there are things you want protected, that may be possible. Consulting with a lawyer for free is a good first step.

Let's take a closer look at the numbers.

According to the American Bankruptcy Institute, which tracks bankruptcy filings, trends and numbers, there were 13,750 bankruptcy filings in the Northern District of Illinois between July and September. That's down significantly from the 15,020 filed during the summer quarter, but higher than the second quarter of 2009 and previous years.

To compare how busy that court is compared to the other two bankruptcy courts in Illinois, the Central District reported 2,033 filings and the Southern District only 1,304. Statewide, that makes 17,573 bankruptcy filings. Compared to other states, Illinois ranked fourth highest behind only California, Florida and Georgia.

Most interesting, perhaps, is that Chapter 13 bankruptcy filings became more popular in recent months. Chapter 7 is the most popular form, but made up less than 70 percent of filings for the first time since 2010 and before that, 2008.

Chapter 13 allows people to keep their assets, including a home and vehicles, and set up a payment plan over 3 to 5 years. This can allow people to lose their debt but still keep their assets.

While the numbers are slightly down, our lawyers on a daily basis help countless clients who are struggling with debt and feel like they have nowhere to turn. Filing for bankruptcy is one way that consumers can get relief and get back on their feet. Living with debt can be stressful, frustrating and depressing. That's no way to live.

If you are struggling with debt and have exhausted all remedies you can think of, set up a consultation with our law firm. We have skilled attorneys who are eager to look at your situation and help you determine if bankruptcy in Chicago works for you.

Continue reading "Chicago Bankruptcy Numbers Take a Dip in 3rd Quarter Because of Loose Credit" »

It's a tough time for young adults in this country.

They have dealt with increasing costs for higher education on top of cost-of-living expenses that never go down. They come out of college after earning a degree over four to five years and are thrust into a job market that is the worst in decades.

And so many are becoming adults and starting their lives saddled with debt. Many college students live off credit cards. They get little guidance from their parents or other people of influence who can teach them the dangers of overspending and relying on credit cards, which have high interest rates and hidden fees, especially for people without credit.

One solution to the problem is filing for bankruptcy in Chicago. While bankruptcy can't wipe out college loan debt in most cases, it can eliminate other unsecured debt that is causing students who have only managed to find low-paying jobs to pay the minimum on their cards.

Even if bankruptcy seems like an extreme option, making minimum payments, missing payments and carrying tens of thousands of dollars in debt while fending off creditor calls and wage garnishment threats is no way to live. If you are having debt problems after having just gotten out of college, consult with an experienced Chicago bankruptcy lawyer before making any other decisions.

A recent MSNBC.com article looks at the disparity between young people and older people in America today, concluding that the Great Recession made the gap between old and young much wider than it had been previously.

The recession caused adults older than 65 to enjoy large financial gains, while those under 35 are mired in losses. While it has historically been found that older Americans have more money than younger Americans, the gap has grown in recent years.

Statistical analysis has shown that those 65 or older had a median net worth of $179,494 in 2009, up 42 percent from 1984. In 2009, households headed by those under 35 had a median net worth of just $3,662. That's down 68 percent in the same time period.

The housing market collapse hit younger Americans worse than their older counterparts. Half of people 65 and older who own houses bought them before 1986, which allowed them to ride big gains in home equity during the 1990s. About two out of three have paid off their mortgages.

Younger adults bought into the housing market recently only to see it collapse and then be stuck with high payments on houses that aren't worth what they're paying. Either that or they walked away and took hits on their credit history. They also have little equity in their houses.

The poor job market has also hit younger people hard. Workers under 35 are finding a difficult time finding a job, while older workers have been in the workforce for a long time and are holding on to steady jobs.

Continue reading "Young Adults Hit With Debt in Chicago Harder Compared to Older People" »

Let's face it: Not everyone is good at managing their finances. While many people are victimized by scams, poor investments or even by their own banks or credit card companies, there are those who require help in handling their financial world.

Sometimes, the problem is magnified when a person gets married or becomes involved with another person. Money issues can cause high levels of stress in marriages, especially if they are allowed to linger.

The amount of interest that credit card companies charge their customers for late payments and other things can be astronomical. Credit card balances are one of the leading reasons people consider filing for bankruptcy in Chicago.

Bankruptcy laws were created with consumers in mind, designed to help them overcome bad situations. Being able to get rid of years of debt, through the help of a Chicago bankruptcy lawyer, can be a freeing feeling for those who have seen their credit disappear. The poor economy, job losses and unexpected medical bills haven't helped at all.

The Associated Press recently wrote an article that explains the top-four money mistakes that couples in America tend to make and what can be done to correct the problem. Those in relationships will tell you that communication is critical in order to keep a household running smoothly.

And money issues are among the chief reasons for divorce. The stress of not knowing where the next house payment is going to come from or how to pay for dinner can lead to mental health issues, physical complications and marriage problems.

Here are some tips to avoid money and relationship problems:

Let's put off talking about it
From a relationship standpoint, putting off the inevitable doesn't make things better. Not discussing a key issue like philosophies about spending and saving can lead to a difficult marriage. Major purchases, how bills will be paid, who will be in charge of paying bills and education and retirement savings are things that should be discussed either on a weekly or monthly basis.

So what if there's some cash hidden on the side?
Keeping money secrets is another obvious area of mistrust and a precursor to stress. If each person wants his or her own spending money, spell it out in the budget and talk about it freely.

It wasn't very expensive
This indicates that there is no budget in place and major purchases aren't being discussed and considered in advance. In order to avoid debt problems, an emergency account should be open and active. Do some research and ask for legal help if needed.

I'm not rich enough for a will
Life insurance may not seem to be a big deal when you're young, but you must consider how an unexpected crisis could affect your mate. If a will isn't set up, a former spouse can benefit or the surviving spouse could get hammered with estate taxes.

Continue reading "Top Money Mistakes That Lead Chicago Couples Into Bankruptcy" »

Recently released data suggests that more than 120,000 jobs were added in November, which lowered the unemployment rate to 8.6 percent, CNNMoney reports.

This is certainly encouraging news. Our Chicago bankruptcy lawyers hope that many of the seasonal workers who were hired in retail and by companies producing consumer goods can hang on to those jobs as we get into 2012.

But for many others, jobs have been scarce. Many people have spent months or even years attempting to get a steady income. For millions of Americans, unemployment benefits have been what they live on. But whether a person is newly employed or still struggling to find work, it's likely that credit has been a crutch that is close to breaking.

Without steady income, people have relied on loans and credit cards to get by. This is a disaster waiting to happen. If the consumer has no income, they are likely getting bombarded with calls, e-mails and letters harassing them and making threats against them. If people happen to have a job, they may be in the process of having their wages garnished.

One initial benefit of filing for bankruptcy is that it stops creditors from hounding consumers. Once the paperwork is filed, creditors are no longer allowed to directly contact the borrower as all their communication goes through the court. That can be a load off their shoulders at a difficult time.

The obvious long-term benefit of bankruptcy is the ability to shed debt that has made life extremely difficult. In many cases, all the debt can be vanquished without a person losing their assets. In some cases, they may have to sell some things to pay off their debt and if they file Chapter 13 bankruptcy in Chicago, they can set up a payment plan to pay off debt.

Back to the employment numbers.

The CNNMoney story reports that experts had predicted about 110,000 jobs would be added, so the new numbers surpassed their predictions. Government jobs actually decreased by about 20,000, though private sector jobs were bumped up by about 140,000.

The majority of jobs were added in retail -- 50,000 ---and hospitality, such as hotels and restaurants -- 20,000. An interesting point to the story is that the Labor Department's numbers are adjusted to take into consideration seasonal trends, so the holiday hiring season isn't all to credit for the job growth.

Still, there are 13.3 million people out of work and 43 percent of those people haven't had a job in six months or more. Less than 1/3 of the 8.8 million jobs that have been lost in recent years still haven't been recovered.

Let's hope our country's economy keeps this momentum going into the new year and stock prices, real estate prices and numbers of hires continue to increase. This is a critical time for our nation and our Chicago bankruptcy lawyers hope the recovery continues.

Continue reading "Jobs Up, Unemployment Down, But Chicago Bankruptcy Still a Viable Option " »

A recent survey found that nearly one in two Americans can't make ends meet and pay basic bills in today's economic situation.

Chicago bankruptcy lawyers understand that times are tough right now. The economy has few signs of improvement and, generally, people are struggling to put food on the table and keep a roof over their head.

For a lot of these people, it's the constant threat of credit card companies, their collection agencies and other debts that have caused these problems. The lack of available funds are tied up in making low or minimum payments to credit card companies.

Considering bankruptcy in Chicago can help consumers get out of the problems they have encountered. Many debt problems aren't the fault of the consumer, necessarily.

Job loss could be a function of the economy and surprise medical bills can level a family. Lenders' high interest rates and exorbitant fees on late or missed payments can also contribute and make a bad situation worse.

A recent survey by Wider Opportunities for Women found that 45 percent of Americans live in households that struggle to pay their bills. That amounts to 39 percent of adults and 55 percent of children.

According to a recent Reuters article, the survey found that a family of four with two working adults pays $821 for housing and $707 for food each month. A single worker family pays about $688 for housing and $244 for food.

Those numbers don't account for vacations, hobbies, college and other expenses beyond the essentials. Some are worried that because a committee of lawmakers failed in its efforts to cut down debt by $1.2 trillion over 10 years, there may be cuts in programs that offer financial support. .

The article goes on to say that the poverty rate is $22,314 for a family of four and about 15 percent of Americans are at that level or below. Many more are just above it and require government assistance to get by.

For many of these people, filing for bankruptcy in Chicago would go a long way toward helping. For those who have some income but who are drowning in debt, Chapter 13 bankruptcy in Chicago may be a good option. This allows people to keep their assets and make a payment plan over three to five years to pay back a portion of the debt.

Chapter 7 bankruptcy is the most common form of bankruptcy and is typically for people who have no income and few assets. Their debts are cleared and they are allowed to continue on without making debt payments.

Both forms of bankruptcy can be helpful, depending on the circumstances. If you find yourself making large payments on credit cards or other forms of debt and teetering on financial disaster, bankruptcy may help. Eliminating debt can free up money to help pay other bills, which could help your economic status.

Continue reading "Bankruptcy in Chicago Can Help in Tough Economic Times" »

A recent Forbes article reports helps consumers figure out how to obtain a credit card, opining that lenders are being more strict with who gets one of their shiny pieces of plastic.

But according to creditcards.com, there are more than 400 million credit cards in circulation in the United States and industry experts believe that companies are sending out offers at record levels.

Many people believe that the amount of credit available in the United States has actually increased, which has led to a decline in the number of Chicago bankruptcies reported in 2011.

Typically, in times of tighter credit, more people are willing to consult with a Chicago bankruptcy lawyer and go through with the process than when more credit is available. That's simply because when more credit is available, people will take it, especially if they are in a financial bind.

But this isn't necessarily a good thing. When these credit companies extend offers to consumers, it's to make them money, not to actually help the consumer. These companies aren't designed to lend out money with zero return. That's why they pack in hidden fees that crop up when payments are late or if certain requirements aren't met.

Interest rates can spike at any time and the "perks" and "rewards" offered typically require huge amounts of spending so that even if a person gets the perks, they end up paying for it i the end. It's not really a perk, after all.

The Forbes article goes on to say that a 720 credit score used to be considered good, but the author believes that credit card companies are considering 750 an "excellent" score. The analysts in the article believe that credit card companies are being more conservative.

But that mainly applies to simply handing out premier interest rates. Anyone can get a credit card and fall into the traps set by card companies. Other news media have reported that there are record numbers of credit card offers being mailed out daily.

Some tips for consumers searching for a credit card:

Payment history is key
Experts believe that people who have a long history of paying their cards on time will likely be able to obtain new cards.

Credit length, diversity is important
Credit diversity means holding different types of loans -- car, home, credit card, store credit. Length of credit simply means showing that you can make payments for years.

Debt-to-credit ratio
Credit card companies don't like to see that a consumer uses one card exclusively and has little on others. They would prefer to see your debt stretched out.

Students who have never owned a credit card before and those under 21 have had difficulty obtaining credit cards since the passage of the CARD Act in 2009. Under the act, they must have co-signers unless they have enough assets or income to obtain a waiver.

Some who get rejected for cards might consider going to a bank and starting a checking account and later seeking a credit card through their bank. There are options, but consumers must be careful. While credit card companies seem to be showing some restraint as far as who they provide cards to, they still want to maximize their business and get as many cards out there as possible. The more cards, the more profit. And that means the more trouble for consumers.

Continue reading "Media Offers Advice On How To Get a Credit Card, But Not the Debt that Follows" »

Our nation's economy and the world's economy has struggled to get recover after years of bank business that went largely unregulated.

After the collapse of the United States' real estate market, things have been slow to recover. After years of prosperity in the mid 2000s, times have quickly turned bleak as banks and other businesses began laying people off and cutting back in such a tough economy.

With housing prices plummeting and people losing their jobs, foreclosures have gone on the rise in Chicago and elsewhere throughout the country. At a time like this, bankruptcy in Chicago must be an option worth considering.

Homeowners are losing their jobs, which is forcing them to stop making monthly mortgage payments. After only a few missed payments, banks are calling and writing letters, urging homeowners to either pay up or get out. But without an income, Chicago bankruptcy lawyers know it is impossible to meet such demands.

Kiplinger recently reported that President Barack Obama's plan to help the housing market has done little to relieve the pressure. After promising that government-backed mortgage programs would help millions of families, the President's programs were largely unused by banks and did little to actually aid homeowners.

As Kiplinger reports, the President's new plan would target "underwater" borrowers -- people whose homes are worth less than what they're paying for them -- to help ease their burden. But the plan doesn't help in addressing the root problem that caused the real estate meltdown.

While foreclosures are the public face of the housing market crash, the underlying issue is what sinking home values have done to equity. Equity in houses is down $7 trillion, or 50 percent since the crash. As a result, many consumers have cut back on spending, which makes up 70 percent of economic activity nationwide.

With a glut of foreclosed homes on the market, it could take years or even decades before prices return to what they were pre-recession. Either way, it's likely that the problems will keep consumers wary of making such a big investment.

The President's initial plan was to help 3 to 4 million homeowners, but the number is less than 1 million. The new goal is to help just over 1 million underwater homeowners, but Kiplinger predicts this isn't possible without home prices rising.

It's obvious that these government-backed programs are being shunned by banks as they find it more profitable to go ahead with foreclosure rather than work with homeowners. But bankruptcy in Chicago is a way to prevent foreclosure without the banks' cooperation.

In bankruptcy, whether an owner has missed one payment or 10, the foreclosure process stops. As unsecured debt such as credit card bills and medical debt gets eliminated, the homeowner can come out of bankruptcy able to make payments on a house. And when the process is ongoing, homeowners can typically stay in their homes.

It's not always the case that a consumer will lose their house after the bankruptcy process is completed. In fact, in many cases they keep their home, get rid of the rest of their debt and can continue making payments.

Every case is different and discussing it with a skilled bankruptcy lawyer should be a homeowner's first priority if they are struggling with debt and are unable to make payments.

Continue reading "Chicago Bankruptcy Aids in Foreclosure Prevention Unlike Fed Plans" »