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" »

Remember cash for clunkers? Well, how about rebates for refrigerators?

Uncle Sam has $300 million in stimulus money, and he wants you to buy a new fridge - or washer, dryer or HVAC, according to Chicago bankruptcy attorneys. The point, of course, is to encourage consumers to start spending - but also to replace old, outdated appliances with new, energy-efficient ones. Modern washing machines, for instance, use about half the water as their older counterparts. They also squeeze out more water during the spin cycle, meaning you'll need less energy to dry your clothes as well.

If you're in the market for new appliances, this might be the time to do it. However, it's important to weigh the pros and cons of the rebate program - especially if you're already struggling to make ends meet without a new fridge to pay for.

Continue reading "Chicago Bankruptcy Attorneys See Pros and Cons to Cash for Appliances Program" »

You can't believe everything you read - especially when it comes to your bank, say Chicago bankruptcy attorneys.

Many banks are sending out letters urging customers to sign up for overdraft protection, a program that allows your bank to authorize a debit purchase - even if there's not enough money in your account to cover it. Some letters are going so far as to threaten customers, warning that their debit cards won't continue to work unless they contact their bank immediately, according to the New York Times.

With bold font and terms like "emergency" and "contact us immediately," these messages can be unnerving - not to mention confusing - for folks who frequently rely on a debit card to make purchases. But their purpose is actually very simple - they're advertisements. And you shouldn't fall for them. Overdraft protection isn't about saving you the hassle of overdrawing; banks want you to sign up so they can charge a fee each time they authorize money because you don't have enough to cover a purchase. Here's the real story on overdraft protection.

Continue reading "Chicago Bankruptcy Attorneys Warn Consumers About Overdraft Protection Fees" »

So you lost your job last year and picked up some unemployment benefits. Once you find employment, you're out of the woods, right?

Not necessarily, say Chicago bankruptcy attorneys. Unemployment benefits sure come in handy when you need to put food on the table. But they can also cost you. As it turns out, unemployment benefits are taxable after the first $2,400 - or $4,800 per married couple. After that amount, you'd better start treating those payments as income, because they'll be taxed that way. Not sure how much you received last year? You should receive a Form 1099-G in the mail, which you'll need to report on your 1040.

Fortunately, there are ways to offset some of the damage - and not just of unemployment benefits, but of any surprise tax.

Continue reading "Chicago Bankruptcy Attorneys Recommend Cash Cushion For Tax Season" »

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" »

The early bird gets the worm - and sometimes the tax refund.

Just because tax deadline day is April 15 doesn't mean you have to wait until then to file, according to Chicago bankruptcy attorneys. Sure, most of us look at the filing process as a chore to be put off until the last possible minute. But with all sorts of new credits and deductions added to stimulate the economy, you might want to get it over with early and get some money back in your pocket sooner rather than later, especially if you're in debt.

Continue reading "Chicago Bankruptcy Attorneys Point Out Benefits Of Early Tax Filing" »

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" »

Remember the days when lenders would look at your credit score to determine whether you were a risk? It was so much simpler back then.

So what's changed? Social networking was invented. By now, most us use - or are at least familiar with - Facebook. And so are lenders, creditors and employers, who are increasingly looking up applicants online to see what comes up, according to Chicago bankruptcy attorneys.

Obviously, it's not going to bode well for you if they see photos of you kicking back cocktails and dancing on tables at your favorite club. You say it's unfair to judge you for what you do on your own time? You have a point, but wait, it gets worse. They also check out your friends. The idea is, responsible people might choose responsible pals. That means whether or not you get that loan might rest not just on the level of your debt, but on whether or not your best friend forever posted those pics from her bachelorette party.

Continue reading "Chicago Bankruptcy Attorneys Warn Social Networking Could Affect Your Credit" »

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" »