Chicago Bankruptcy Lawyer Blog

The Occupy movement started strong and faded quickly after police and city officials began taking a stance against protesters and seeking to remove them.

But at the core of the message, the young people who slept in parks, chanted sayings, held signs and sought change wanted a better shot at success. They wanted to live the American dream. This movement didn't come when the country was at its most prosperous, it came years after the Great Recession when unemployment is high, the real estate market is dying and the country is mired in debt.

It's about finances.

Many young people have come out of college with tens of thousands of dollars in debt and they have few job prospects. They can't find work, living expenses are high and life is tough. But bankruptcy in Chicago can help.

Chicago bankruptcy lawyers have been able to help numerous clients who are looking for answers. For many, bills are mounting, income is low and there seems to be few options. Bankruptcy may be a way out.

By filing for bankruptcy, the creditors who have been hounding the consumer are held at bay. They are banned from contacting the filer. Second, once the process goes through, the debt disappears. In some cases, assets may be sold to pay for some of the debt, but not always and there are exemptions.

For young people starting their life off in debt, this may be a helpful tool to get them on track. Credit card debt and other loans can lead to late fees and high interest rates that can cause frustration and prevent them from being successful.

Kiplinger recently wrote a column providing some financial advice to young people who are looking for answers:

Reality check: Rather than naively travel to New York City or Hollywood to seek fame and fortune, do some research. The article suggests that looking at cities that have solid job prospects and a low cost of living is smarter than traveling to a big city hoping to hit it just right. The odds are stacked against the millions of people who think that the big city means big jobs.

Student loan help: There are options to help cut down on student loans, including setting up gradual payments or income-based repayment options on federal loans. There are proposals in Washington to try to expand the options available to students.

Out-of-state tuition is very expensive and while some states provide loopholes to get around that extra cost, it can still be pricey. Some students may be able to avoid major debt by taking their second choice and choosing the in-state option. Choosing public or private or community college for core classes may be smarter and fit the family budget.

Health insurance: With universal health care in the pipeline, most young people should be able to get even basic health care. Some cities and states have high health insurance premiums, while others are more affordable.

The column suggests that most young people should be able to afford basic health insurance for less than $100 per month. Young people with high risks or pre-existing conditions can stay on their parents' insurance until they're 26.

Continue reading "Young Chicago Adults Needing Financial Advice May Consider Bankruptcy in 2012" »

Recently, the Federal Reserve laid out a not-so-heralded plan to boost the economy by driving down long-term interest rates in order to stimulate the economy.

But the plan only works if borrowers take out loans now, which sends them into debt. Even with low interest rates, this situation can be a challenge to overcome. In fact, investors didn't respond well to the plan, with the stock market largely in a sell-off in the days after the announcement was made.

Let's be clear here, though -- credit is a necessary function of our society. Most people don't have $15,000 to $20,000 to buy a new car. And very, very few people have $150,000 in cash to purchase a new home. So, it's obvious that banks and lenders are needed in order for our society to function.

However, what usually happens is that people are forced into bankruptcy in Chicago because of the lenders' hidden fees and ridiculously high interest rates. This can leave a borrower actually paying a lot more than what the item or service is worth. Chicago bankruptcy attorneys have seen time and time again many consumers who have been taken advantage of by lenders.

While low interest rates are beneficial to those who must take out loans to make purchases, they can still add up over time.

According to a recent USA Today article, the $400 billion that the Fed shifted may actually have a low impact on consumers. They may end up getting lower rates on mortgages and fixed-rate loans, yet those holding long-term bonds may seen interest income dip as a result.

Because of the nation's high 9.1 percent unemployment rate, the move is unlikely to provide long-term improvement. Some experts say the impact on consumers will be minimal. Here are some areas where consumers may see changes:

Mortgages
Mortgage rates are a focal point of the national bank's plan. The $400 billion in short-term Treasury bonds will be used to buy long-term Treasury bonds by next summer. The money will be reinvested from mortgage-backed securities to help mortgage rates stay low.

Interest rates are already low -- 4.09 percent on a 30-year, fixed mortgage -- so it's not interest rates that are the problem. Consumers are nervous about the housing market and are unwilling to invest.

Consumer Debt
Most people's credit card rates are tied to prime rate, so the Fed's plan could keep credit card rates lower at least until 2013. Yet, some analysts say the prime rate isn't based fully on federal funds, but is also determined by the rates at which banks lend each other money and on the market.

So, if the economy and stock market continue to slump, rates could end up rising.

The article goes on to say that those holding long-term bonds will suffer under the Fed's plan, including retirees hoping to benefit from interest rates later in life. This includes insurance companies, which are heavily invested in bonds. These companies could raise rates to make up for lost income there. Short-term savings and the stock market also will be affected.

Most people hope that the Fed's plan works to help this country get back on track. But most people don't have a strong feeling that it will.

Continue reading "Fed Plan Could Lead Chicago Consumers Into More Debt" »

The Lexington Herald-Leader recently reported about a couple in Kentucky facing $70,000 in federally insured student loans, despite dropping out of school because of family problems and defaulting on the loans.

The couple is now buried and debt, yet haven't filed for bankruptcy. While it's true most student loans cannot be discharged, filing bankruptcy can still help those struggling with such debts. And more help may be on the way to deal with predatory lenders in the student-loan sector.

Lawmakers recently introduced legislation that would allow students to discharge commercial student loans in bankruptcy proceedings, reversing a 2005 law, according to U.S. News & World Report.

Even without the law change, filing for bankruptcy in Chicago is a way to eliminate debt that is causing stress, hardship and frustration. But the first step is consulting with an experienced Chicago Bankruptcy Lawyer who can help explore all options and determine the best avenue for you based on the laws in place.

According to the news report, the national average for a three-year default rate for 2008 is 13.8 percent, according to federal data. Private, for-profit "career colleges" tend to have the highest default rates because of how expensive tuition is compared to the average salary upon graduating.

While it's possible that some student loans can be considered an "undue hardship" and can be discharged, it requires showing a bankruptcy court judge this is the case. If you are able to work, this can be difficult.

But according to U.S. News & World Report, the law may be changing. With college costs rising and the economic climate getting worse, a change to the bankruptcy law would be helpful for many people.

Both bills introduced in the U.S. Senate and U.S. House of Representatives would restore the ability to discharge commercial student loans in bankruptcy proceedings, reversing a 2005 change to the law for borrowers who find themselves unable to make payments on their loans.

"Before changes were made to the bankruptcy code in 2005, only government issued or guaranteed student loans were protected during bankruptcy," said Sen. Dick Durbin, D-Ill., in a press release. "This protection has been in place since 1978 and was intended to safeguard federal investments in higher education. Today's bill would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005, so that privately issued student loans will once again be dischargeable in bankruptcy."

The law change is particularly crucial in today's economy, where only 56 percent of 2010 graduates were able to find work, according to a study by the John J. Heldrich Center for Workforce Development at Rutgers University.

But even without the law change, if it happens, bankruptcy can be helpful for those struggling with debt that is brought on by student loans. While discharging the student loans can be difficult, filing for bankruptcy can offer the opportunity to eliminate other debt, making it easier to pay back what is owed. Being mired in debt is difficult on anyone and using the laws to protect consumers can provide a fresh start for Chicago families.

Continue reading "Chicago Bankruptcy Can Help Students With Debt Caused By High College Loans" »

We exercise. We visit the doctor regularly. We eat healthy -- all to preserve our physical health. But taking care of your financial health is every bit as important.

The estimated credit card debt in the United States is nearly $15,000, according to Credit Cards.com. Many blame the recession, the deteriorating housing market and other financial obligations for the increased levels of bad debt in Chicago and elsewhere.

It's evident that many residents are currently struggling with insurmountable debt, including credit card debt, mortgage debt and medical bills. Many times, by the time bankruptcy becomes a consideration, your credit score has already been ruined. Consulting a Chapter 7 bankruptcy lawyer in Chicago can help you start fresh and begin rebuilding a solid credit rating.

In March alone, nearly 145,000 people filed consumer bankruptcy petitions. This number is a 41 percent increase from the near 102,000 filings in February, according to Reuters.

As a result, potential homeowners are finding it difficult to obtain loans.

"Right now, in this economy, credit is essential to getting a mortgage. There are different kinds of mortgages, but credit is a huge factor, along with the value of the property and your income," says Tracy Becker, author of the Credit Solutions Kit and founder of credit restoration company North Shore Advisory.

For those dealing with insurmountable debt, or who are significantly upside down on their home or months behind in payments, consulting with a bankruptcy attorney could be their best course of action. For others, credit score rehabilitation may still be possible short of bankruptcy.

For those who may be looking for a loan to purchase a new house, condo or apartment, it is advised you follow these simple steps:

-Establish a credit history. You need credit to get credit. Those who are new to the credit game may not satisfy a lender as they possess zero record of financial credibility. Most lenders will require that you have a credit history of at least a year prior to applying, or getting approved, for a loan.

-Know your front- and back-end debt. Lenders are interested in how you plan to deal with front-end debt. Front-end debt includes interest, taxes, insurance, loan principle. Lenders require that you show that roughly 30 percent of your gross income can go towards paying off your front-end debt.

-Try to boost your credit score. Ask if a family member or spouse will add your name as an authorized user. This can help boost your score by as much as 60 points.

Continue reading "Those Considering Bankruptcy in Chicago already have Credit Score Blues; New Beginning a Sigh of Relief" »

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" »

Remember last decade's adjustable-rate mortgages? You know, the subprime loans that led to millions of mortgage defaults across the country - and pretty much launched the whole recession? Well, they're back.

But this time around, lenders say they're different - and depending on your financial situation, they may be able to help you afford a home. In the past, ARMs came with risky gimmicks, like rates that adjusted every six months (seriously, how can you keep up with that?) and an option that allowed people to put off paying interest - leading to a huge bill later down the line.

Today's ARMs are far more conservative, explain Chicago bankruptcy attorneys.

Continue reading "Should Chicago Homebuyers Opt For New Adjustable Rate Mortgages?" »

There's a new plan to help restructure the mortgages of underwater borrowers. The only catch? It won't work for everyone, say Chicago bankruptcy attorneys.

So far, more than 20 lenders have jumped on board the FHA-backed Short Refi program, which aims to help homeowners by getting lenders to write off 10 percent or more of their principal balance. Borrowers are considered eligible if they are regularly making mortgage payments and do not yet hold an FHA loan. Sounds good, right? Here's where it gets sticky. See, Fannie Mae and Freddie Mac loans don't qualify.

Continue reading "How Bankruptcy Can Pick Up Where New Loan Modification Program Leaves Off" »

Thinking about getting a little help from Uncle Sam for that mortgage or refinance? It might cost more than you think, say Chicago bankruptcy attorneys.

This month the Federal Housing Administration announced it will raise premiums for its popular government loans by a quarter of a percentage point. It's a tiny increase, for sure, but for folks toeing the line between being able or unable to afford a loan, it could have big consequences.

Continue reading "Chicago Borrowers To Pay Higher Premiums For FHA Loans" »

It looks like troubled homeowners may soon have a better option for modifying home loans, according to Chicago bankruptcy attorneys.

A new bill backed by Sen. Sheldon Whitehouse suggests that the federal government consider allowing bankruptcy to be used to modify the mortgages of the millions of Americans at risk for foreclosure. Currently, the best aid Uncle Sam has mustered is the failing Home Affordable Modification Plan, which has barely assisted 500,000 of the four million homes it set out to save. Clearly, homeowners need a better solution.

Continue reading "Could Bankruptcy Help Struggling Homeowners Avoid Foreclosure?" »

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" »

Looking to lower your mortgage payment? You might have more choices than you think, say Chicago bankruptcy attorneys.

Traditionally most homeowners have lowered their house payments by refinancing, which can result in a new, lower interest rate and therefore a lower payment. Problem is, the refinancing process takes time and costs money - if you even qualify in the first place, that is. Thanks to ever-tightening credit requirements, many homeowners don't meet the criteria for a refinance. Fortunately, there are other ways to save money on your mortgage.

Continue reading "Ways Chicago Homeowners Can Cut Their Mortgage Payment Without A Refinance" »

Sometimes to move forward, you've got to let go. And for many folks hoping to conquer debt in 2011, that means letting go of long-held - but often unfounded - fears about bankruptcy.

While bankruptcy filings are increasing each year, many of us are still holding back, according to a recent article in the Chicago Tribune. We worry about what our friends and families will think, about whether we'll have to give up our assets and about how we will cope with the fact that bankruptcy could stay on our credit report for the next decade. But by avoiding one of the most effective ways to lower debt, we may actually be making our financial situation worse.

Continue reading "Chicago Tribune Clears Up Myths About Bankruptcy" »

By now you've probably already heard that the Fed plans to plunge $600 billion into U.S. banks. But what does that mean for the average American?

That depends on where you're at financially, say Chicago bankruptcy attorneys. By printing more money, the Fed hopes to lower already-low interest rates. And as we all know, low interest rates are good for borrowers, like those of us taking out a home loan, but bad for savers - like the millions of Americans saving up to pay off debt or weather a rough economy.

Continue reading "Low Interest Rates Might Help Chicago Homebuyers, But Could Hurt Others" »

It's still a shot in the dark, but there's a possibility that some foreclosed homes could be returned to their owners, according to Chicago bankruptcy attorneys.

Officials in every state across the U.S. - including Washington D.C. - are investigating improperly handled documents and illegal activities that may have allowed lenders to foreclose on thousands of homeowners who should not have lost their properties, according to the AP Press - things like signing documentation without a required witness, having signatures given by employees who didn't know anything about the material in the documents or - even worse - by people who hadn't even read the papers.

Continue reading "State Officials Across the U.S. Investigate Legality of Foreclosures" »

For many folks, a mortgage refinance seems like a dream come true - with a lower house payment, you might as well be getting free money each month, right?

But just because rates are low doesn't always mean you'll benefit from a refinance, say Chicago bankruptcy attorneys. In fact, sometimes the hidden costs of reworking your mortgage might mean you're better off sticking with the one you have and looking for other ways to find extra money - like lowering credit card debt and other obligations.

Continue reading "Hidden Costs of Mortgage Refinancing Can Leave Chicago Homeowners with More Debt " »