Chicago Bankruptcy Lawyer Blog

A new court ruling raises doubts that hard-fought consumer protection laws will actually be able to protect consumers.

Earlier this month, the Supreme Court ruled that consumers who signed up for a credit card with a binding arbitration clause don't have the right to dispute creditors in court over unfair fees or charges. Instead, they must hire an independent (read: expensive) arbitrator.

Here's the kicker: many credit users don't even realize their card came with an arbitration clause because it was hidden among fine print in the credit card agreement. That's exactly the sort of sneaky behavior the formerly heralded Credit CARD Act of 2009 was supposed to prevent.

Critics say the 8-to-1 vote will only encourage credit card issuers and lenders to add even more clauses restricting consumers to arbitration down the road. Large credit card companies know that, when it comes to arbitration, consumers don't have much of a shot.

Chicago bankruptcy lawyers rarely hear of a credit card holder winning an arbitration case. This is probably because, as the top hirers of independent arbitrators, multi-billion-dollar credit card companies hold a lot of sway.

Data shows that in California, consumers won just 4 percent of cases between 2003 and early 2007, according to a story in SmartMoney. Credit card issuers won 94 percent of those cases.

When it comes to consumer protection, a Chicago bankruptcy is far more likely to help Illinois consumers than recent laws that are open to interpretation. Bankruptcy was created specifically with the intention of helping consumers plagued by years of credit card debt, medical bills, and other financial burdens.

Even if it's believed that a bank violated a provision of the Credit CARD Act, which was written to prevent random interest hikes and unfair fees, the arbitration clause would still take precedence. In addition, the ruling may restrict consumers from banding together in a class-action lawsuit because this would be considered going to court.

If you have a significant amount of credit card debt, a simple rate hike or the addition of a new fee could take paying the bills from difficult to impossible.

Most consumers don't realize they've been forced into binding mandatory arbitration. Do you hold a credit card from a major bank? There's a good chance your card came with an arbitration clause. To out if you're affected by the ruling, call your credit card issuer and request a copy of your most recent credit card agreement. You can usually find the clause in the dispute resolution section.

Most folks will never have to go to arbitration. But you increase your chances if you have a large, long-overdue balance - or if you become an unfortunate victim of identity theft.

By lowing debt, bankruptcy reduces the need for arbitration since credit issuers will be less likely to go after your debt and you'll be less likely to be adversely affected by a surprise interest rate hike.

When the pressure of debt is eliminated through a Chicago bankruptcy filing, you'll be out from under the thumb of creditors - and back in control of your own financial destiny.

Continue reading "As Limitations of Consumer Protection Laws Come to Light, Chicago Bankruptcy May Offer Solution" »

Most Americans admit to being worried about the credit card debt crisis. But when it comes to admitting a personal debt problem, few seem willing to fess up.

Nine out of 10 people polled in a Bankrate.com survey said that debt was not a source of friction in their lives. Yet statistics show that the average U.S. consumer owed approximately $4,200 in 2011. Something isn't adding up.

Time and time again, Chicago bankruptcy attorneys have seen clients fall deeper into debt because they are in denial that they need help. Had they taken action earlier - by filing for Chicago bankruptcy, for instance - they may have been able to stop foreclosure or make eliminating debt much simpler.

Many times it's easy to accept that a friend or neighbor is in debt - but hard to come to terms with the fact that you have a problem. There's also the shame factor. Many folks are too embarrassed to admit that their finances are in sorry shape. But it's important to realize that if you're in debt, you're not alone.

Years of dismal employment rates, dropping real estate prices, and stagnant wages make paying the bills difficult for everyone. Debt may not be entirely your fault. But until you admit you have too much debt, it will be impossible to help alleviate it.

A recent Bankrate.com article looks at the best ways to tell whether you have an issue with debt.

Your Spending Is Out of Line with Income
Is your take-home pay falling while your credit card balance is rising? Whether it's because of reduced hours, a layoff, or rising consumer prices, this is a pattern that can be very hard to correct once it starts. The larger a credit balance gets, the faster it continues to grow. Sure, it's easy to hold out hope for that raise or new position - but there's no guarantee that it will come through. And if it does, your debt may be beyond help at that point. When you can't stop spending more than you're earning, it's time to seek help.

You Never Pay More than the Minimum
When money is tight, it's tempting to make the smallest payment possible. But doing so will cost you a lot in the long run. If you're paying only $25 on a $500 bill, that means you're paying interest on $475 a month - plus the thousands of dollars you may already owe. The problem is that once you make a couple minimum payments, your balance can rise so rapidly that you can't afford to make anything BUT the minimum in the future.

You're Close to Your Credit Limit
Much of your credit score is derived from how much debt you are carrying. Carrying 30% or less of your available limit is ideal. If you are routinely approaching - or surpassing - your limit, it's a sign you have more debt than you can handle. Continuing to do so will only damage your credit score and rack up fees.

You Don't Know Your Balance
Are you in the habit of leaving bills unopened until the due date, or making out a check for the minimum payment without looking at the balance? This is a classic sign of debt denial. Removing yourself from the situation might make you feel better for the time being, but it won't do anything to help your debt. If anything, ignoring the situation only makes things worse.

You're Juggling Bills
Have you ever opened a new line of credit in order to transfer your balance? You may get a lower rate initially, but ultimately you are just shifting debt around. If you find yourself juggling multiple lines of credit, it's a sign that you need to actually lower debt - not just bounce it between cards.

You're Hiding the Evidence
We all deserve a little spending indulgence now and then, and hiding the occasional reasonable purchase from a spouse or family member is somewhat normal. But when it becomes routine, watch out. If you're keeping secrets, it's a sign that something isn't right.

Continue reading "Many Chicago Consumers Living in Denial about Out of Control Credit Card Debt" »

A recent study of 100,000 people found that e-mail address says a lot about a person's credit score. Credit Karma, a service that provides free credit scores, studied its database and found some interesting things regarding the average credit scores based on people's e-mails.

While credit scores aren't determined by which e-mail server you use, they can be affected by many factors. The history of making on-time payments is a big factor, as are whether you have made minimum payments, have lots of debt and other things.

Some people believe that filing for bankruptcy in Chicago will ruin a person's credit score, but the people who need bankruptcy likely are mired in debt and haven't seen that their credit scores are substandard as it is. If a consumer has spent years battling creditors, making minimum payments, dealing with job loss or other factors, it's likely their credit score isn't very good.

The good news is that bankruptcy can restore what is now in bad shape. Chicago bankruptcy lawyers have been able to help many people whose scores were poor because of major debt problems. Bankruptcy laws were designed with consumers in mind. They are to help people get a second chance when they are down on their finances.

According to Credit Karma's poll, Gmail account users seem to have a record of better credit scores than those with Yahoo e-mail accounts. Credit scores range from 501 to 900 and a higher score means the person is more reliable in paying off their debts.

According to the data, BellSouth and Comcast e-mail users had the best credit scores (estimates based on MSNBC's graph):

Yahoo: 641
AOL: 658
Hotmail: 660
MSN: 662
Gmail: 678
Comcast: 686
BellSouth: 695

In a related story, MSNBC found that people in the Midwest have the best credit scores, based on numbers crunched by credit monitoring agency Experian. Eight of the top 10 cities nationwide for highest average credit score are in the plains states.

Wausalu, WI: 789
Minneapolis, MN: 787
Madison, WI: 785
Cedar Rapids, IA: 781
San Francisco, CA: 781
Green Bay, WI: 780
Boston, MA: 779
Peoria, IL: 778
Sioux Falls, ND: 778
La Crosse, WI: 777

The top cities with the lowest average credit scores seem to be spread throughout the south and west:

Harlingen, TX: 686
Jackson, MS: 701
Corpus Christi, TX: 702
Monroe, LA: 706
Shreveport, LA: 706
Augusta, GA: 709
Bakersfield, CA: 709
Las Vegas, NV: 709
Tyler, TX: 710
El Paso, TX: 710

If your credit score is low and you have been battling debt problems for years, consider bankruptcy in Chicago. It may be a way for people who are trying to re-build their credit to shed the debt that has led to their credit problems in the first place.

If you are considering bankruptcy or looking for some help with poor credit or debt issues, consult with a Chicago bankruptcy lawyer for free. A skilled attorney can assess your situation and help you make determinations of the best way to proceed with your finances. Perhaps bankruptcy fits and maybe it won't, but get all the facts before making important decisions.

Continue reading "Consumers With Bad Credit Could Benefit From Chicago Bankruptcy" »

While many people believe that life after bankruptcy is all no credit and no fun, it's not and walletpop.com offers five tips to rebuilding your credit after bankruptcy.

Chicago Bankruptcy Lawyers have seen how mounting debt, either from credit cards, unexpected life-altering medical bills or the loss of a job, has prevented families from continuing to make payments on their houses or pay other bills. That's why working to stop foreclosure in Chicago through bankruptcy is a critical step to saving a homeowner's property.

Chapter 13 bankruptcy in Chicago can be advantageous to people who have houses or other large assets they want to try to protect. It allows them to develop a payment plan to save those assets. Chicago Chapter 7 bankruptcy, however, eliminates all debt and permits a consumer to make a fresh start. .

The laws are designed to protect those who need help and are willing to abide by the law in restructuring their finances. The purpose is to take responsibility and move forward without languishing in debt.

According to the American Bankruptcy Institute, U.S. Bankruptcy Court for the Northern District of Illinois, which includes Chicago, had nearly 65,000 personal bankruptcy filings in 2010. That's way up from about 20,000 in 2006. Statewide, bankruptcies were up 12 percent from 2009 to 2010, The Wall Street Journal reports.

The laws are helping many get back on track. On to the tips:

Let go of the guilt and shame: As we noted, personal bankruptcies were up 9 percent in 2010. That's 1.53 million filings. While some people can feel disappointment or shame, bankruptcy filers should note that outside factors are frequently the reason for filing for bankruptcy, not a failure at running your finances. Unexpected medical bills are the No. 1 reason for filing for bankruptcy.

Reflect and Regroup: Reflect on how you got into the position of filing for bankruptcy and allow the process to help you move forward into a healthy financial future. Enlist a team of friends, family, church members, civic organizations or others who can provide support.

Create a realistic budget and pay existing bills over time: After bankruptcy, stay vigilant about your finances. Even if you have never created and stuck to a budget, now is the time. Don't buy things you don't need or splurge, but live below your means. Don't let bills linger and allow credit card company interest to hammer you back into financial troubles.

Pick a credit card that can help you rebuild credit: A secured credit card can allow you to deposit money, say $500, that acts as a spending limit. By charging small amounts and repaying the debt monthly, your credit can recover. Some people, like those who have filed for bankruptcy within the last year, may not qualify. And some secured cards charge high fees or don't report your payment history to credit bureaus.

Separate fact from fiction about bankruptcy: Many people think that filing for bankruptcy disqualifies them for getting any type of credit for 10 years. That's simply not true. Many people can get a home loan. Credit cards, car loans and other forms of credit are often available for many bankruptcy filers after the process is over.

Continue reading "Tips for Life After A Successful Bankruptcy in Chicago" »

Less than 10 years ago lenders were handing out mortgages like there was no tomorrow. This spring, it's a different story, say Chicago bankruptcy attorneys.

Just one-third of borrowers who apply for a mortgage in coming months will qualify, according to Wallet Pop. After being burned by a record number of defaults and with a glut of foreclosed homes on their hands, banks are not surprisingly older, wiser and a whole lot stricter. So what does a home buyer need to do to fall into that magic 33.3 percent?

Continue reading "How Chicago Homebuyers Can Increase Chances of Getting a Mortgage" »

It's nerve-wracking enough to field calls from bill collectors over your own debt - but what if they're harassing you about a debt burden that belongs to someone else?

It's more common than you may think. Six years after moving into our house, I still receive the occasional call for someone named Brandi who was likely the former owner of our phone number - and obviously in some dire financial straits. But the calls came with a lot more frequency after we first moved in - sometimes more than once a day.

Continue reading "Are You Being Harassed Over Someone Else's Debt?" »

Most credit cards are designed to keep you in debt. But what if they could help you lower debt instead?

That's what TD Bank says it's doing with a new credit card that offers a reward for paying more than the monthly minimum. It makes sense - at least in theory. Typical rewards cards give discounts for airline miles or shopping, encouraging consumers to spend more money, say Chicago bankruptcy attorneys. But if you're drowning in debt, you should be spending less, not more.

Continue reading "Could New Credit Card Help Chicago Consumers Keep Spending In Check?" »

Some things are easier said than done - and it looks like that might be the case when it comes to retaining the smart saving and spending behavior so many Americans adopted in response to the recession.

Last year, 63% of consumers said they had modified their money habits because of the economy, according to a poll by Citigroup. Just one year later, that number has dropped to 52%. Incomes are on the rise once again, and apparently so is consumer debt - one of the problems that led to our economic troubles in the first place. Could budgeting and avoiding debt end up like the majority of New Year's resolutions - out of sight, out of mind? That depends, say Chicago bankruptcy attorneys.

Continue reading "Will Americans Keep Frugal Habits or Fall Back in Debt When Economy Rebounds?" »

Uncle Sam is extending your tax deadline - but you might prefer to say no thank-you, say Chicago bankruptcy lawyers.

Because of a Washington D.C. holiday on April 15, the government is giving taxpayers until the following Monday - April 18 - to mail in our tax returns. But there's no reason to wait until the 15th or the 18th. The IRS officially began accepting returns this week - even for folks who plan to itemize deductions (officials previously told itemizers to hold off until new tax laws went into effect). And the sooner you file your taxes, the sooner you may be able to get that tax refund - and reap the benefits.

Continue reading "Chicago Taxpayers See Benefits of Filing Tax Return Early" »

Your Valentine might have given you a box of chocolates yesterday, but will he leave you with debt tomorrow?

Earlier this month we talked about the consequences of hiding debt from your significant other. But what about the reverse - how does your spouse's debt affect you? It's not the most romantic topic, but with Valentine's Day come and gone maybe it's time to give it some thought. Understanding how your relationship affects your finances - both if you stay together and if you divorce - is essential, explain Chicago bankruptcy attorneys.

Continue reading "Is Your Partner's Debt Wreaking Havoc On Your Relationship?" »

Would you be OK with paying a 60% premium on your purchases? If you're like most Americans, the answer might be yes.

Consumers are signing up in droves for high-interest credit cards like First Premier's 59.9% APR card. In fact, the same card had plenty of takers when it debuted with a whopping 79.9% APR (the company only lowered the rate this year because so many borrowers were defaulting). So why are so many folks clamoring for a chance to be charged outrageous interest? Simple, say Chicago bankruptcy attorneys. They think it's the only card they can qualify for.

Continue reading "Chicago Consumers Sign Up For Credit Cards With Outrageous Rates" »

Kmart's latest blue light special might not be on clothing or toys, but on financial services.

With millions of Americans looking for checking account alternatives to avoid rising bank fees, retailers like Kmart, Wal-Mart and Best Buy are jumping on the banking bandwagon, according to The Washington Post. Kmart, for instance, is testing out prepaid cards, cash transfers and even cash checking services in its Illinois stores in hopes of luring customers who are either fed up with big banks or who never had a bank account in the first place. But as with any product, consumers are finding there are pros and cons.

Continue reading "Chicago Shoppers Turning To Big Box Stores For Financial Services" »

Valentine's Day is fast approaching, but the majority of Americans are doing something decidedly unromantic, say Chicago bankruptcy attorneys.

At least 30 percent of married people cop to cheating - of the financial kind, that is. In other words, they admit to hiding a major purchase or other financial indiscretion from their partner, according to the Minneapolis Star Tribune. A whopping 90 percent confess they avoid talking about money with their significant other. And thanks to the economy, these financial secrets are increasingly revolving around too much debt.

Continue reading "Are Your Financial Secrets Hurting Your Relationship?" »

We've all heard the classic financial advice a million times: pay down debt first, buy rather than rent, and invest as much as possible in your work's 401k.

But even the most trustworthy and time-tested tips can be wrong in the right situation - especially when it comes to debt, according to TheStreet. So how do you know what works best for you? Chicago bankruptcy attorneys have the tools to help you find out.

Continue reading "Debt Myths That Can Hurt Your Finances" »

I always thought of Grandma as the penny-pinching, coupon-clipping type. So I was more than a little surprised when, after she passed away, we learned that she'd left Grandpa with thousands of dollars in debt.

Sadly, it's becoming an even more common scenario in today's economy. Rising healthcare costs and medication prices coupled with dwindling retirement portfolios are leaving seniors with little choice but to put their everyday necessities on a credit card, ringing up debt that they may not live to pay off. And that's bad news for all of us, say Chicago bankruptcy lawyers.

Continue reading "Why More Elderly Americans Are Passing Debt On To Their Families" »