Chicago Bankruptcy Lawyer Blog

Income taxes aren't the only thing to dread come spring - but there's a silver lining.

With warm weather on the horizon, gas prices are starting their typical upward climb, say Chicago bankruptcy attorneys. The price at the pump is up 9 cents this month and fast approaching a $3 a gallon national average. That's an increase of 81 cents over last year, according to AAA.

Now here's the good news. First, a rising Illinois unemployment rate - about 11 percent as of January - may come in handy when it comes to gas prices. Less folks driving to work means less demand for oil, and possibly an affordable summer at the pump. Second, there are some easy ways to save money by offsetting the rising cost of gas.

Continue reading "Chicago Gas Prices Go Up As Spring Approaches" »

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" »

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 " »

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" »

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" »

The word is out - the $75 billion loan modification program meant to protect homeowners from foreclosure has actually made the situation worse.

Out of the millions of Americans facing foreclosure, Uncle Sam's program modified mortgages for just a few hundred thousand - some of which ended up going into foreclosure anyway. Now critics are saying the program has worsened the crisis by leading us on. Instead of saving money for alternatives to modification or, worst case scenario, for moving to a new residence, many folks kept holding out hope that modification would save them - until it was too late.

Many homeowners simply can't afford to keep their homes - and unless they can get rid of debt or change their lifestyle, a modification that barely lowers their mortgage isn't going to make much difference. Fortunately, that's where Chapter 13 bankruptcy comes in, according to Chicago bankruptcy attorneys.

Continue reading "Chicago Bankruptcy Attorneys Say Government Loan Program Helped Make Foreclosure Crisis Worse" »

Citibank is giving some 4,000 homeowners a very happy holiday.

The banking giant is suspending foreclosures and evictions for people with Citi-owned loans through mid-January. A company spokesman said the aim is to reduce stress during a notoriously hectic time of year, according to MSNBC.com. In the meantime, the bank says it's at work on alternatives to foreclosure.

Unfortunately, helping potentially 4,000 families means only helping a miniscule percent of the millions of Americans that could lose their homes in coming months. For the lucky few, it will certainly provide relief (albeit temporarily), but the rest of us are going to have to take matters into our own hands if we want a home after the holidays.

Continue reading "Some Home Foreclosures on Hold for the Holidays" »

Even though it's December, some folks are hearing a different kind of jingle bells - the sound of their phone ringing off the hook with bill collectors on the line.

When you're late with payments on your debt, the bank doesn't care that it's the holiday season. Forget peace and goodwill towards men - collectors are not going to give you a moment's rest until they collect your money. After all, it's their job to bother you. But even though it may not feel like it, you do have rights. If harassment from bill collectors is getting out of hand, you might be able to put a stop to it with help from a bankruptcy attorney.

Continue reading "Bankruptcy Can Stop Creditor Phone Calls" »

A growing number of Americans aren't going to be home for the holidays this year - and it's not because they're traveling.

Despite news that the economy is under recovery, foreclosures are again on the rise as a growing number of borrowers with good credit and fixed-rate loans default on their mortgages. It's just the opposite of what triggered the recession - when borrowers with bad credit began defaulting on subprime mortgages with adjustable rates.

So what's going on? Homeowners are simply running out of money. Chalk it up to too much financial stress for too long. Some folks were laid off months ago and are still out of work - and out of cash - today. Others are growing weary of bearing the burden of debt. Economic recovery might look good on paper, but families across the country are still suffering from the recession. To make matters worse, the holidays are fast approaching - and that means more spending.

But fortunately there's a way to save your house, whether you've missed your first mortgage payment or the bank is already threatening to foreclose.

Continue reading "Mortgage Defaults Increase Despite News of Economic Recovery" »

Sometimes finding help is as easy as asking for it.

Uncle Sam heard our cries for help loud and clear - in one particular case, at least. With the housing and job markets lagging behind recent economic progress, Congress has just opted to expand a popular homebuyer tax credit and continue handing out unemployment checks.

So what does that mean for you? If you're in the market for a house, you could still be in line for the $8,000 tax break that was originally set to expire at the end of the month. And if you live in a home you've owned for five years or more, you're now eligible for up to $6,500 off your taxes. Without a job? Unemployment will be extended by another 14 weeks (20 weeks in states with unemployment of more than 8.5%).

Once upon a time, Americans lost their homes, cars, possessions and reputations because they were too embarrassed to seek help. But that's changing - help is coming to you. You just have to keep your eyes open.

Continue reading "Uncle Sam Extends Homebuyer Credit, Unemployment Checks " »

The economy is picking up momentum, but it's not necessarily going to be a smooth ride.

Case in point: sales of new homes recently dropped for the first time in six months. Until now, home sales had been on the upswing since the market hits its roughest patch this January.

You can blame the decline on the fast-approaching expiration date for a temporary homebuyer tax break. The credit, which gives qualified homebuyers a tax break of up to $8,000 for their purchase, ends Nov. 30.

That might seem like bad news for wannabe homeowners - and for the economy - but it shouldn't mean the end of opportunity. Right now, Congress is debating whether to extend the credit through next March, fading it out slowly after that. Besides that, mortgage rates are the lowest they've been in years and there is no shortage of affordable homes on the market. And maybe most significantly, there are other ways to save up for a house - including bankruptcy.

Continue reading "New Home Sales Fall While Congress Debates Extending Tax Credit" »

The economy might be recovering, but we're not out of the woods yet - especially when it comes to foreclosures.

Even though a $75 billion government anti-foreclosure program recently reached its goal of helping 500,000 folks get loan modifications, that's only one-eighth of the 4 million homeowners it originally set out to assist. And while some banks have helped more than one-third of eligible homeowners with the program, others like Wells Fargo and Bank of America have helped just 20 and 11 percent, respectively.

Now consider that millions more are facing foreclosure but ineligible for loan modification. Still, as many as half of those who receive a modification end up defaulting anyway. It's depressing stuff. But luckily, there's another government program that can save your house. It's been around for years, has been proven to work again and again and doesn't require your lender's approval - it's bankruptcy.

Continue reading "Loan Modification Program Hits Target, But Is It Enough?" »

Personal bankruptcies are on the rise, according to the American Bankruptcy Institute - and there's a reason that might actually be a good thing.

Obviously, filing for bankruptcy isn't ideal. In a perfect world, we'd all be able to overcome our debt burden by making a budget and sticking to it. Actually, in a perfect world, we wouldn't have a debt burden to speak of - hey, we'd probably be rich. But this is real life. And when you're talking about debts of $10,000, $20,000 or more, freeing your finances isn't so simple.

A 2 percent minimum payment on a 20K debt is $400 a month. That's $400 that can't go towards the mortgage, utilities or your car payment. Combine that with a lackluster economy that's not exactly encouraging cost-of-living increases and you get what feels like a hopeless situation.

So what's the good news? More people filing for bankruptcy means more people overcoming their troubles to beat debt.

Continue reading "More Consumers Turning to Personal Bankruptcy" »

As usual, reading the financial headlines today made my head spin.

On the one hand, it was just announced that the economy shrunk at a much slower rate than expected this last quarter - only 0.7 percent compared to the 6.4 percent drop during the first three months of the year. According to the Associated Press, this supports the belief that the economy is actually growing. That's good news. But wait - according to this story in the Chicago Tribune, consumer confidence plummeted unexpectedly due to job security concerns. It looks like retail will probably be down this holiday season, hurting recovery. Hmmm, not so good news.

Up, down, up, down - it's hard to know what to believe or how to feel about the economy. At times like this, I tune out and worry about the one thing I can control - my personal finances.

Now, I'm not denying that the recession is real or that the economy has an effect on our bank accounts. Hey, I've been feeling the pinch, too. But sometimes I think the recession is a scapegoat for problems we would have had anyway - which is actually good news.

Continue reading "Watch Your Bank Account, Not the Headlines" »

If you were going to modify your mortgage, common sense says you'd make it more affordable, right? Well, it seems that some lenders don't agree.

More than half of mortgage modifications have either made no change or actually made loans more expensive, according to this story in USA Today. How? It turns out that lenders are adding late fees, property taxes and other penalties into the principal during the modification process - in some cases, making payments bigger than before.

Of the mortgages modified from the beginning of the 2008 through March 31, 2009, 27 percent were unchanged and another 27 percent were actually made higher.

As you can imagine, this is leading to a shocking number of second-time defaults - up to 40 percent. Many borrowers became delinquent because of pre-existing debts or loss of income from unemployment and they just don't have the flexibility to cover rising payments, even for just a little while.

Despite the federal government's $75 billion initiative, mortgage companies are continuing to do what works best for them - not homeowners.

Continue reading "Some Mortgage Modifications Have Hidden Fees" »