Chicago Bankruptcy Lawyer Blog

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" »

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" »

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 Illinois Attorney General recently expanded its probe of alleged "robosigning" of mortgage foreclosure documents, announcing subpoenas to two Florida-based mortgage servicing support providers, the Chicago Tribune reports.

This is welcome news for many of the thousands of homeowners who are dealing with foreclosure in Illinois. Chicago Foreclosure Defense Lawyers have years of experience helping people avoid foreclosure through bankruptcy. Many homeowners want to save their house from foreclosure, but think the only way to do so is to fight their foreclosure in the state court. Not true. Filing for Chapter 13 bankruptcy in Chicago immediately stops foreclosure and makes creditors disappear.

"Robo-signing" has become a national phenomenon where companies hired by banks and lending institutions sign documents without even checking them for accuracy and sign the names of bank officials who never saw the documents. In many cases, these documents include incorrect numbers regarding how much a person owes on their house or how much they have paid. In some cases, the bank may not even have the right to pursue the foreclosure action.

The Illinois Attorney General has asked two of these companies that weren't already under investigation for every affidavit used in an Illinois foreclosure or bankruptcy case since Jan. 1, 2007 and the names of all employees who signed affidavits since then, according to the Tribune. The companies have until mid-June to respond.

All 50 states have been investigating financial institutions and mortgage servicers alike, with differing levels of intensity and aggressiveness. According to RealtyTrac, an online foreclosure marketing company, there were 5,241 new foreclosures in April in Cook County alone and more than 10,000 statewide.

This shows that many people are falling behind on payments because of the lag in the economy and banks are sweeping in and trying to take away people's houses. The biggest causes of debt are unexpected medical bills, job loss and predatory credit card companies that charge ridiculous interest rates and fees.

But while the situation seems bleak, there are ways to protect your home from foreclosure. Filing Chapter 13 bankruptcy will immediately stop the foreclosure process, no matter how long the house has been in foreclosure. It will also stop creditors from calling and bugging you, your friends and family and company.

What this area of law does is it allows consumers to recover from debt by creating a payment plan so they can keep large assets, such as a house and vehicles. Bankruptcy is one area of law where the government has decided to help consumers.

Bankruptcy is especially necessary in the current economy and recovery from the Great Recession, when many people have fallen into a position where they may no longer be able to make house payments or meet other obligations.

Chicago Foreclosure Defense Lawyers have been able to help many people recover from financial despair through bankruptcy and other means. If you, a friend or family member is struggling to get by and needs help, take our free debt analysis today.

Continue reading "Illinois Attorney General Goes After Robo Signers in Chicago Foreclosures" »

CNN is reporting that six percent fewer consumer bankruptcy filings were reported in the first quarter of 2011. At first blush, that sounds like good news.

The truth of the matter is that bankruptcy filings are at historically high levels. Chicago bankruptcy attorneys continue to handle record numbers of filings for consumers who are dealing with bad real estate debt, overwhelming credit card debt or astronomical medical bills.

Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 in an effort to reduce the number of bankruptcy filings. Despite the name, this legislation was largely a handout to credit card companies, banks, the medical industry and other big campaign donors. The largest change was the requirement that some with certain income-to-debt levels establish a repayment plan.

To illustrate the impact the economy has had on filings, there were 1.1 million bankruptcies nationwide in 2006 -- last year nearly 1.6 million people filed for bankruptcy protection.

Through March, a total of 340,012 filings were reported, which includes Chapter 7 bankruptcy filings, Chapter 13 filings and filings by farms and corporations.

The stigma once associated with bankruptcy has diminished as consumers seek protection in record numbers. The reality is that bankruptcy can provide tremendous relief and permit a family or filer a new lease on life. Collection calls will stop immediately upon filing. And if they don't, you may have standing to take legal action against them.

Everyone wants to know if bankruptcy will leave a black mark on their credit score. Yet few seem to consider the credit consequences of foreclosure.

This month we talked about bankruptcy's impact on credit - initially, filing can drop your score by a one or two hundred points. Of course, as your debt disappears, you have can begin improving your score - often to a whole new high. As Chicago bankruptcy attorneys point out, many clients qualify for credit cards or loans right after filing.

Foreclosure, on the other hand, is a whole other ball game. Let's take a look at what happens when you fail to make those mortgage payments.

Continue reading "How Foreclosure Affects Chicago Homeowners' Credit Scores" »

It looks like troubled homeowners may soon have a better option for modifying home loans, according to Chicago bankruptcy attorneys.

A new bill backed by Sen. Sheldon Whitehouse suggests that the federal government consider allowing bankruptcy to be used to modify the mortgages of the millions of Americans at risk for foreclosure. Currently, the best aid Uncle Sam has mustered is the failing Home Affordable Modification Plan, which has barely assisted 500,000 of the four million homes it set out to save. Clearly, homeowners need a better solution.

Continue reading "Could Bankruptcy Help Struggling Homeowners Avoid Foreclosure?" »

Two foreclosures in Massachusetts could have a big impact on banks - and homeowners - nationwide, say Chicago bankruptcy attorneys.

Last week a Massachusetts court voided the foreclosure of two homes, citing the fact that Wells Fargo and U.S. Bancorp could not prove they held the mortgages at the time they seized the residences. Last year, two other banking giants, Bank of America and JP Morgan Chase & Co., briefly stopped foreclosures because of similar documentation problems. If lawmakers get their way, banks are going to have to be a lot more careful about foreclosing on properties - and consumers may get better protection.

But homeowners facing foreclosure shouldn't breathe a sigh of relief just yet.

Continue reading "How Foreclosure Ruling Could Affect Chicago Homeowners" »

It looks like even mortgage companies are feeling the holiday spirit this time of year.

Freddie Mac recently announced plans to stop foreclosures from Dec. 20 to Jan. 3 - long enough for folks to stay in their homes during the Christmas season. Fannie Mae has pledged to halt evictions as well. With millions of Americans behind on mortgage payments this time of year, it's a nice gesture. Unfortunately, point out Chicago bankruptcy attorneys, it's also only putting off the inevitable.

Continue reading "Mortgage Companies Temporarily Suspend Chicago Foreclosures" »

It's still a shot in the dark, but there's a possibility that some foreclosed homes could be returned to their owners, according to Chicago bankruptcy attorneys.

Officials in every state across the U.S. - including Washington D.C. - are investigating improperly handled documents and illegal activities that may have allowed lenders to foreclose on thousands of homeowners who should not have lost their properties, according to the AP Press - things like signing documentation without a required witness, having signatures given by employees who didn't know anything about the material in the documents or - even worse - by people who hadn't even read the papers.

Continue reading "State Officials Across the U.S. Investigate Legality of Foreclosures" »

The latest foreclosure statistics are in, and things are looking up - sort of.

The good news is that slightly less homeowners are underwater, a term used to describe when your home is worth less than what you owe on your mortgage. The amount of U.S. homeowners with negative equity fell from 23 percent to 21 percent this spring, according to a report by Zillow.com. Though it looks like a small change, it means we could see fewer foreclosures in the future, say Chicago bankruptcy attorneys.

Still, any amount of foreclosures is too many - and with more than one of every 1,000 homes being seized in the month of June, many at risk homeowners need financial help.

Continue reading "Chapter 13 Bankruptcy Is an Effective Method for Chicago Homeowners Hoping to Stop Foreclosure" »

There's a big difference between debt relief and debt relief. And no, that's not a typo.

You've probably heard the advertisements on the radio and read them on the Internet - so-called debt relief companies claim they can negotiate with your creditors in order to get your debt paid off. They promise you'll have a low monthly payment and freedom from debt in just a few years, or even a few months. How can you go wrong, right?

But just because a company has "debt relief" in its name or slogan, that doesn't mean they can get the job done.

Continue reading "Bankruptcy Can Sometimes Lower Debt When Chicago Debt Relief Companies Can't" »

There's hope for Chicago homeowners who owe more on their mortgage than their house is worth.

On Tuesday it was announced that home prices increased for the first time in nearly four years this February, according to The Standard & Poor's/Case-Shiller price index. Increasing values mean that homeowners can finally start rebuilding equity - that's the good news. The bad news is that housing prices aren't predictable, and they probably won't rise as rapidly as they once did. But who wants another bubble anyway, right?

Besides, whatever happens in the future, you're in luck just by being a homeowner - and here's why.

Continue reading "Increasing House Prices Mean Hope for Underwater Chicago Homeowners" »

Who wouldn't want to get a $6,500 tax credit this year? Apparently the many folks who can't afford to buy another house, say Chicago bankruptcy attorneys.

In November, the federal government updated its homebuyer tax credit - which was originally meant to help renters buy their first home - to include current homeowners as well. The idea was to encourage homeowners to upgrade to a new house, hopefully stabilizing prices and boosting the sluggish real estate market in the process.

But homeowners aren't biting - mostly because they can't afford to. With unemployment up, home values down and foreclosure looming, homeowners might find better benefits from another strategy: Chapter 13 bankruptcy.

Continue reading "Chicago Homeowners Find an Alternative to Foreclosure With Chapter 13" »