Chicago Bankruptcy Lawyer Blog

It seems like just yesterday that a round of credit card reform laws was enacted (well, actually it was just last month). But the Federal Reserve already has another idea to help consumers.

If passed, a proposed law will limit credit card fees by prohibiting your credit issuer from charging you more than your violation. So if you exceed your credit limit by $5, then you'll owe $5 - instead of the $40 they currently charge. Credit card companies would be banned from charging more than one fee for the same violation and inactivity fees - penalties levied for not using an account - would be eliminated.

Pretty cool, huh? But here's the catch. To benefit, you have to use less credit. And for some folks, filing for bankruptcy is the best way to reduce dependence on credit cards - and therefore lower debt.

Continue reading "Consumers in Chicago Could See Limited Credit Card Fees If New Law Is Passed" »

The recession may be good for something after all: getting rid of debt.

On the one hand, tough economic times are making consumers more reliant than ever on credit, say Chicago bankruptcy attorneys. Many of us have been piling new debts on top of the balances we carried before the recession hit. On the other hand, that extreme financial distress is encouraging consumers to do something many of us once thought unthinkable - file for bankruptcy.

And, lo and behold, we're finding out that it works.

Continue reading "More Consumers Turn to Chapter 7 Bankruptcy to Relieve Debt, Say Chicago Bankruptcy Attorneys " »

It's no secret that recently enacted rules could make having a credit card easier. But while creditors must now limit when they can levy fees, raise interest or even send out a bill, your credit score is still ultimately in your hands, say Chicago bankruptcy attorneys.

The last of President Obama's credit reform measures went into effect Monday. And here's some of the good news.

• Your creditor can no longer raise the rate on an existing balance - assuming you make your payments on time - so if you normally pay 14% on a $10,000 debt, you don't have to worry about suddenly paying 24%.
• Creditors can no longer charge you for exceeding your credit limit, unless you opt in for this service.
• Creditors must give 45 days notice before making certain changes to your account, like raising rates or fees
• You must receive your bill 21 days before it's due
• If you have multiple lines of credit with different interest rates on a single card - for instance, one for cash advance and another for purchases - creditors must apply any payment over the minimum to the balance with the highest interest rate (instead of the lowest rate, as they used to do).

Now here's the catch - and how you can make it easier on yourself.

Continue reading "Chicago Bankruptcy Attorneys Analyze New Credit Card Reform Laws" »

Gone are the days of teenagers getting credit cards before their drivers licenses, thanks to new credit card legislation, Chicago bankruptcy attorneys say.

Starting Feb. 22, members of the under-21 crowd won't be able to get a credit card unless they can either demonstrate an independent source of income or provide proof of parental permission.

Overall, it's probably a pretty smart law - but I've got a couple complaints. First, that they didn't pass this thing sooner, before me - and my first credit card - went to college. Second, that it really only puts off the inevitable. Sure, relying on a checking account - and being limited by the cash in that account - is a good experience. But chances are, most kids are going to end up with at least one credit card someday. Regardless of whether you get that card when you're 15 or 40, you're going to have to learn how to manage it to avoid debt.

Continue reading "Chicago Bankruptcy Attorneys Say Credit Card Companies Tighten Restrictions for Young Consumers" »

Love is supposed to be in the air, but it can be hard to feel positive when your bank account is, well, negative.

But whether you think of Valentine's Day as the most romantic day of the year or just another excuse to spend money cooked up by card companies, you can make the most of the holiday without going broke - even if you're in debt, according to Chicago bankruptcy attorneys.

Continue reading "Show Your Bank Account Some Love This Valentine's Day, Say Chicago Bankruptcy Attorneys" »

Somehow our priorities got switched around during the Great Recession. Homeowners who used to prioritize paying their mortgage above all else are now opting to use that money to pay their credit card bills, Chicago bankruptcy attorneys say.

In a way, it's a strategy that makes sense. One-quarter of American homeowners are underwater - meaning they owe more on their house than it's now worth. Consequently, they're wary of putting money into a home with no equity because doing so feels futile. Credit cards, on the other hand, seem to pay off. We can use plastic to buy necessities like groceries, gas, and clothes. And for those of us who have lost our paycheck or just aren't bringing home enough money, credit cards enable us to cover what we can't afford with cash (while our debt grow in the meantime).

But just because one solution seems easiest doesn't mean it's the smartest - or that there isn't a better strategy out there. There are consequences whether you choose to default on your mortgage or your credit.

Continue reading "Chicago Bankruptcy Attorneys See More Americans Paying Credit Cards Instead of Mortgage" »

Ever try to fix a bad day with retail therapy? I know I have.

Sometimes it's all too tempting to drown out nagging worries or unhappy experiences by trekking to the mall for something bright, shiny and new. And to some extent, it works - if you make sure to keep your purchases realistic and within your budget, say Chicago bankruptcy attorneys.

Problem is, when we're not feeling our best our judgment can get clouded, making it harder to stick to everyday limits. Have you heard of emotional eating? Well, this is emotional spending. And it can add up - especially if you're already in debt. Though it's no simple task to stop something you do unconsciously, you can change your behavior fairly easily before it happens by identifying - and learning to avoid - certain triggers.

Continue reading "Chicago Bankruptcy Attorneys Offer Tips to Curb Emotional Spending" »

If you look hard enough, you can always find some good news to temper the bad.

This week's depressing newsflash informed us that employers cut 20,000 jobs last month - more than economists expected, and enough to threaten a recent dip in unemployment and shake up the stock market, according to Chicago bankruptcy attorneys.

The good news? Getting that loan might not be so difficult. Banks have are finally stopped tightening the standards they've been placing on most loans - a sign that credit woes might finally be easing. And according to the Fed, far fewer banks believe the value of the loans they hold will continue to deteriorate. Of course, this doesn't mean banks are easing up on any of the restrictions already put in place - but you can't win them all.

Economic recovery might not be happening overnight, though it is likely in the works. But you can use this time to your advantage. Why not get your finances back in shape so when the economy does pick up, your luck will, too?

Continue reading "Layoffs Increase While Credit Troubles Improve, Say Chicago Bankruptcy Attorneys" »

Some rules were made to be broken - and paying off your debt is no exception, say Chicago bankruptcy attorneys.

Common wisdom has always held that it's best to pay off the debt with the highest interest rate first - and for good reason. This way, you'll save the most money because you'll be avoiding the biggest future payments, and you'll keep your most expensive debt burden from growing.

But there's a downside to this strategy. As you know, the key to lowering debt is to pay more than the minimum balance, since small minimums like 2-4% might not cover much more than interest. And if you're only paying interest, the principal - the actual amount for the items you purchased - will stay the same, meaning you'll have to keep making those interest payments indefinitely. Problem is, people often get discouraged if they find it difficult to pay enough to cover a high interest rate plus some of their principal. And they use this as an excuse to quit.

Continue reading "Chicago Bankruptcy Attorneys Say Paying Off Any Debt Is Better Than Doing Nothing" »

It's nearly impossible to turn on the TV or computer without being startled by images of the dire situation in Haiti. And while we all wish that we could undo the damage (and many of us are generously opening our wallets to help try), we can also take home a lesson from the tragedy about the real meaning of hardship.

Many of us are struggling to pay the bills and fend of foreclosure. But regardless of what our outcome is, most of us will have food, running water and a roof over our heads - whether it's in a roomy house or a shared apartment. Worst case scenario, we have family, friends or organizations available to help us get back on our feet. Haitians don't have that luxury right now.

Now, I don't mean to indicate that we're in any way superior just because we're American. Lucky, is more like it. What happened in Haiti two weeks ago is a combination of geography, economy and pure bad luck. And hopefully, the country will be able to rebuild with global help so that, whatever happens in the future, they'll have the infrastructure and resources to survive. My point is, no matter what your situation, it could always be worse. There is always a reason to be grateful -- even when debt seems to be running your life.

Continue reading "Finding Debt Relief Might Be Easier Than You Think, Say Chicago Bankruptcy Attorneys" »

It's bad enough that we have to deal with pushy retailers and their promotions when we go to the mall, but now they're following us into our home, say Chicago bankruptcy attorneys.

When you fill out online surveys, enter drawings at stores or even use your credit card to pay, you're giving retailers access to your personal information. Next thing you know, your mailbox is filled with catalogs and your inbox with ads, and the phone is ringing off the hook with store employees who want to tell you about their next big sale. Ever visited eBay or Amazon and saw a homepage filled with a bunch of stuff you like? It's no coincidence - those picks are just for you, based on what you've been viewing online.

That's fine if you have all the money in the world and don't mind the harassment. But for the large majority of Americans -- many of us struggling to balance paying off debts with making the mortgage - it's just another obstacle to financial freedom.

Continue reading "Chicago Bankruptcy Attorneys Say Protect Privacy to Stop Harassment and Save Money" »

Some folks don't save because they think they can't afford to, but many more have another excuse - they don't want to go without. A dollar saved is a dollar you can't spend, right?

But that's not true. A good savings plan isn't about not spending - it's about earning. I'm talking about interest. Whether you stow your cash in a savings account, a 401k, a CD, government bonds or the stock market, you're (hopefully) going to earn a certain level of return. Think about it this way: if you can spend more of your money this year investing in your future - and less paying off debt - you can go from forking over interest to earning interest.

Of course, first you'll have to tackle that annoying debt and come up with a savings plan that's right for you, as we discussed on Tuesday and Thursday. Then comes the fun part - making more money.

Continue reading "Get The Most From Your Savings With Interest" »

Using cash usually makes more sense than credit. You don't have to deal with interest, you know you can't spend more than what's in your account and the act of physically parting with your money makes you less likely to splurge -- and wind up in debt.

But there's at least one pitfall to paying with paper - ATM fees. Let's say you need to take out some money and you aren't anywhere near your bank. Instead, you go to the nearest ATM. You can expect a fee of at least $3 for using an ATM other than your bank's. And that's not all. Your bank thinks it has to punish you for withdrawing money elsewhere, so you can also expect to get dinged up to $2 on the other side. If you're taking out $20, you've already spent a quarter of your money before you even break the bill.

Fortunately, the situation can be pretty easily avoided.

Continue reading "Watch Out for ATM Fees That Add Up" »

Imagine that you've got a $1,500 debt leftover from the holidays (not that big a stretch for some of us, no?). Now imagine that you receive an offer for an 18% interest rate if you transfer your balance from your current card - which has a 30% rate. Should you go for it?

It might seem counterintuitive, but the answer is often no. Even though less interest means less money in theory, creditors can make you jump through expensive hoops to get that lower rate - so expensive that they may cancel any benefits.

First, many credit cards charge transfer fees of 3 to 5 percent, according to the Associated Press. Are you willing to shell out $75 to transfer a $1,500 debt? Or $500 to transfer a $10,000 debt?

Continue reading "Credit Card Balance Transfers Not Always the Best Solution, Caution Chicago Bankruptcy Lawyers" »

Despite recent credit card reform, credit card companies aren't giving up all their tricks.

If you're anything like most Americans, you've probably been receiving a glut of mail from credit issuers in recent months - most of it notifying you of rather big term changes like higher interest and steeper penalties for exceeding your credit limit. But if you look at these notices carefully, you might notice another seemingly insignificant fee - a $1 or $2 charge for receiving paper statements.

At first glance, it might not seem like much. But if this indicates a new trend, we could end up paying $12-24 - or more - a year for each credit card, just for receiving statements the way we've always done. With many of us still struggling to make ends meet, we'd be better off switching to paperless statements and electronic payment.

Continue reading "Banks Start Charging Fees for Paper Credit Statements" »