Chicago Bankruptcy Lawyer Blog

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" »

Those late payments can cost a lot more than the late fees they result in.

When consumers take longer to pay their bills, businesses have less cash handy to pay their own bills, setting off a cycle that slows down the entire economy, Chicago bankruptcy attorneys say. Statistics agree. Legal firms, for instance, received payments approximately three days later in 2009 than in 2008, according to financial information firm Sageworks. Architectural and engineering businesses waited closer to five days longer, while poor tax preparers and bookkeepers saw wait time for their money increase by 10 whole days.

In most cases, the economy is out of our control. But this might be the one time when you can make an impact on the bigger economic picture. By reducing your debt, you can free up funds to pay your bills on time, bidding adieu to late payment fees and boosting the economy at the same time.

Continue reading "Chicago Bankruptcy Attorney Tips for Avoiding Late Payments" »

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" »

We often hear about how we shouldn't rely so much on credit. But rarely do we hear the other side of the story - the fact that many of us could no longer qualify for more credit if we wanted it.

Just a few years ago, lenders were handing credit out like candy - in the mailbox, at stores, on college campuses and through subprime mortgages. Heck, I even know 5-year-olds who were offered credit cards through the mail. But if banks are at fault for giving out credit consumers couldn't afford, we have to take some blame for spending what we couldn't afford. Many folks (myself included) once used that credit as an excuse to spend more than we earned. The end result? An economic meltdown that's caused consumers to default on their debts - and scared banks to get stingy with future credit.

So if credit is so dangerous, what's the problem if we have less of it? Because our economy needs some credit to get back on track.

Continue reading "Consumers Credit Is Getting Harder to Come By" »

With Christmas shoppers strapped for cash, some folks are looking into how they can help friends and family at the smallest possible cost.

At its best, a more frugal holiday brings out our creative sides - I know folks who are making homemade gifts, finding small but thoughtful presents or just performing simple acts of kindness. At its worst, though, seemingly inexpensive gifts can drag us into debt - I'm talking about loan co-signing.

At first, it might seem like the perfect present. Let's say you're short on cash and your best friend is in need of a new car. Rather than buy her a Christmas gift, you offer to co-sign her car loan. You're helping her out at no expense to yourself, right? Not always. Unfortunately, it can turn into the most expensive present you've ever bestowed.

Continue reading "Chicago Bankruptcy Lawyers Warn Against Cosigning Loans" »

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" »

Fact: Mortgage rates are at an all-time low. Fiction: A lower mortgage is the answer to all your prayers.

The average rate for a 30-year mortgage fell to around 5 percent recently. That's pretty convenient because it means rates won't be adjusting significantly higher, as many have feared, and - if you're lucky enough to be able to refinance - you could significantly lower your monthly payment. But if reduced rates solved everybody's problems, foreclosures would come to a halt, consumer spending would rise and we'd certainly stop worrying about the recession.

No, there are too many other factors. Many of us are still unemployed - or worried about becoming unemployed. We're still dealing with the fallout from falling home values. And, most significantly, we're still in debt. Lots of it.

If you don't change your current situation, relief from lower rates will be short-lived. Mark my words, mortgage rates will go up again. And they'll go down. And they'll go back up. Do you really want your financial security to rest on a seesaw?

Continue reading "Eliminate Debt to Make Most of Lower Mortgage Rates" »

Colleges hold your future (and your tuition) in their hands, so you'd think they'd have your best interest in mind, right?

Surprisingly, no. College is where many people - yours truly included - start the downward spiral into credit card debt. Banks set up recruiting stations on campus to entice students to sign up for credit cards. It's where I got my second card sophomore year (I got my first the summer before college with the encouragement of my parents - gee, thanks Mom!). So why would the school allow such a thing? Because they receive a kickback when you use the card - and the more students who sign up, the more money they get. In some cases, the credit card company actually pays your college to provide a list of student names.

According to the New York Times, most college seniors leave with $2,500 in debt - and that's in additional to nearly $20,000 in student loans. Not exactly representative of the freedom mostly associated with graduation.

Continue reading "Bankruptcy Can Relieve the Debt You've Been Carrying Since College" »

Something rare happened to me recently - I actually heard some positive economic news. In this day and age, that's reason for some (cautious) celebration.

So here's the happy newsflash. Proof has finally arrived that the $787 billion economic stimulus package passed in February was (no surprise) worth the money, according to a New York Times editorial. Last week, second-quarter economic performance results were released and, at long last, the economy seems to be shrinking at a slower rate. We're losing 1 percent a year instead of the more than 6 percent loss we experienced in the first quarter.

OK, so we're still at negative economic activity, but it's a lot closer to becoming positive. And there's another good sign: the majority of the stimulus money hasn't even been spent yet. That's due to happen between now and September.

But the outlook isn't all roses (you knew there had to be a catch, right?).

Continue reading "Illinois Bankruptcy Lawyers See Economic Growth, But Warn Road to Recovery Might Be Long " »

Here's a riddle for you - what do homeowners and a certain large African bird have in common? Answer: They're both known to bury their head in the sand when scared. Unfortunately, instinctive behavior isn't always logical - and the bulk of an in-denial homeowner's problems, like the bulk of an ostrich's body, will still be glaringly visible.

So what homeowner problems am I speaking of? Mortgages. Since 2008 and continuing through next year, adjustable rate mortgages have been resetting from the lower "teaser" rates to much higher rates - meaning you might suddenly be required to pony up 30-50 percent more money a month. Not that it should come as a surprise when it happens. When you signed your mortgage agreement, you should have been made aware of when the higher rates would kick in (though lenders aren't always the clearest bunch - but that's another story).

Yet even though most homeowners know what's coming, many do nothing to prevent it.

Continue reading "Illinois Bankruptcy Lawyers Remind Homeowners to Get Help Before Mortgage Payments Get Too Expensive" »

I guess the banking industry hasn't heard of karma.

After sending our economy into a downward spiral with irresponsible lending practices - and putting millions of Americans out of homes, jobs and dreams in the process - they were bailed out by the same taxpayers they nearly destroyed.

So when the industry caught wind of the proposed Consumer Financial Protection Agency, a group that's only purpose would be to protect consumers against the same sort of events in the future, you'd think they'd be on board. They owe it to us, right?

Apparently not, because the lending industry has the nerve to fight tooth and nail against the agency. As op-ed columnist Bob Herbert put it in the New York Times: "We're reaching a whole new level of chutzpah here."

Continue reading "Chicago Bankruptcy Laywers Suggest Chapter 13 for Consumer Financial Protection" »

Loan modification is a good idea in theory. You can't afford your mortgage, so a modification company convinces the bank to rewrite your loan, lowering your monthly payment to a more reasonable level. You can afford to keep your house while the bank avoids having to go through the costly foreclosure process - and under the government's new Making Home Affordable initiative, gets a $1,000 incentive for modifying your mortgage. Everybody wins, right?

Ah, if only that was the reality. The $75 billion taxpayer-funded mortgage relief program was intended to prevent millions of eligible homeowners from falling into delinquency and foreclosure. But instead, millions are still losing their homes.

It seems that despite the money carrot, lenders are still not buying the program. A recent story in the New York Times exposed what consumer affair bureaus have known for a long time - many candidates for loan modification never make it through the red tape at the bank.

Continue reading "Illinois Bankruptcy Lawyers Compare Benefits of Chapter 13 to Loan Modification" »

Have you noticed the post office getting a little louder lately? OK, probably not, but the recent surge in foreclosures has also led to a surge in jingle mail.

What is jingle mail? It's when homeowners walk away from their house rather than go through the foreclosure process or continue paying an upside-down mortgage. In some cases, they simply put their house keys in an envelope and mail them to the lender, hence the jingling sound.

Homeowners that walk do it because they mistakenly believe there is no other solution. They're upside-down on the mortgage - meaning their home is worth less than the loan they must still pay - or maybe they simply can't afford to make their loan payments any more.

But jingle mail is not the only option.

Continue reading "Illinois Bankruptcy Lawyers Offer Chapter 13 as Alternative to Foreclosure" »

Whoever said that patience is a virtue might have been talking about payday loans.

You've probably noticed payday loan centers in your neighborhood - maybe you've even used them yourself. An online search for payday loans in Chicago nets nearly 300 results. And with so many folks living paycheck to paycheck, it's no wonder. But, as with tax refund loans, while there's no faster way to get your earnings, there's also no faster way to lose them.

It's why my first payday loan was also my last. My coworker at the time wanted to go out to a club one night, but I said I had to wait until we got paid. No worries, she said, we'd just go get a payday advance. She took me to a center, where the cashier counted out three crisp $100 bills - for a $50 fee. Ouch! I decided then and there I'd rather wait for a few days and hold onto my entire paycheck.

My coworker wasn't so patient.

Continue reading "Payday loans a bad deal, advise Chicago bankruptcy attorneys" »