Chicago Bankruptcy Lawyer Blog

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" »

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" »

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" »

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" »

Every fall, I hope for a gradual transition from warm to cool weather. And every year, I'm rudely surprised as we go immediately from the last Indian summer night to a chilly, frost-covered morning. As if being robbed of balmy fall temperatures weren't enough, I get that first big heating bill. Not a good start to the holiday season.

But unlike fixed costs such as your mortgage or car loan, you have the power to lower your winter heat bill. It just takes a little self-discipline - and sometimes a new financial strategy.

Let's talk about the discipline part first. Don't worry, I'm not asking you to freeze. I'm merely suggesting that you turn down the thermostat a few degrees during the day and program it so it doesn't fall below 55 degrees at night, when you're bundled up in bed anyway. Then, when your body adjusts, you can try lowering it a few more degrees during the day if you choose. I used to keep my thermostat at 70 degrees no matter what. When I dropped it to 64, I shaved 20 percent off my heating bill. And I got more use out of all those cute sweaters I've been collecting over the years.

Continue reading "Save Money on Your Heating Bill This Season" »

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?" »

Contrary to popular belief, I don't think America's biggest obsession is with cars, Starbucks or American Idol. It's with something a lot closer to home - housing prices.

For the last several years, neighborhoods all over the nation have been in a mass panic over home values. Mine is no exception. When a nearby house goes for sale, everyone grabs a flyer to check out the asking price and compare it to their own properties. I have a friend who checks Zillow.com - the site that "zestimates" your home value - at least once a week. Home values are the topic of discussion everywhere from churches to bars.

As for me, I tune it all out. Why? Because housing prices don't really matter.

Sure, it probably sounds radical, but if you know anything about the stock market, then you'll understand my point. Price is only relevant if you plan to sell today. Like shares in a company, a home's true value is about more than just the current price - it's also about the future. If you plan to stay put for a few more years, chances are that you'll recover much of the value you lost when the most recent real estate bubble burst. If you stay in your house even longer, you'll start to see some gains again.

Continue reading "Why Debt Matters And Home Value Doesn't" »