Illinois Bankruptcy Lawyers Blog

A news radio station out of Washington is reporting that the Mortgage Debt Forgiveness Act of 2007 has a key tax break that is set to expire at the end of the year.

Many Chicago homeowners are stuck in a bad place because their mortgage is underwater due to what has happened in the frustrating real estate market. Based on job loss, high medical bills, credit card debt and greedy banks, many homes are heading for, or already in, foreclosure.

This is why Chicago bankruptcy has become a popular option for many Chicago consumers. Our Chicago bankruptcy lawyers have seen how foreclosure or a bad mortgage have stripped families of all their savings, causing them major problems.

And while the government has offered little help to rectify the situation, there have been some minor benefits to their feeble efforts to help distressed homeowners. One of those benefits is expected to expire at the end of the year, which could bring more debt to consumers.

The radio station believes that when the Mortgage Debt Forgiveness Act of 2007's tax break expires at the end of the year, it will cause homeowners to lose tens of thousands of dollars. An expert says that for someone who had $150,000 forgiven by the bank, that would be $150,000 of taxable income for the year.

When the tax break expires, it's going to mean a person who loses their house to a short sale, will no longer be able to report that as income on their taxes. Area homeowners may attempt to boost up their short sale to this year in an effort to get it in before the tax break expires.

Many people believe that there will be hard lobbying to extend the tax break longer, but if it expires, the appeal of a short sale may diminish for homeowners. The debt forgiven is only for primary residences and it had to be used to buy, build or improve the house.

This is big news for homeowners because for those who consider a strategic default or a short sale, the tax break is a big help. Many analysts believe that when the tax break expires, it's going to be a major hardship for homeowners.

But these same homeowners should understand that filing for bankruptcy in Chicago can be a major benefit if they find themselves in foreclosure or in an otherwise difficult financial situation.

Tax laws, bankruptcy laws and the implications of losing or selling your house are very complex. This isn't a process that should be left up to an inexperienced lawyer or certainly not one who has no background in bankruptcy laws.

Businesses file for bankruptcy because they understand they are able to shed creditors, lose debt, free up capital and allow their companies to get back on track financially. The same goes for consumers. If your house is in foreclosure or is about to be, bankruptcy laws can protect you from the banks, which may try to come after you for what you owe. Remember, a home loan is based on a contract, which may be enforceable under the law. But bankruptcy can help people who are ordered to pay off major debts.

Continue reading "Key Mortgage Tax Break Set to Expire, Leading to Chicago Bankruptcy" »

Generally under-reported in the news media are the many benefits to Chicago bankruptcy, which can help reduce consumer debt, save people from bad mortgages and improve prospects after a job loss.

Our Chicago bankruptcy attorneys believe that bankruptcy filings have gone a long way toward helping consumers get their finances back on track.

While many Americans don't fully understand how this process can be beneficial, millions of Americans are using these laws to help them achieve financial freedom from major credit card debt, snowballing medical bills and other hardships.

CNNMoney recently reported that credit card debt was down 11 percent in 2011, compared to a year earlier. Further, the average amount of consumer debt had dropped in every state.

The average amount of debt a consumer had was $7,404 in 2010. Just a year later, that number fell to $6,576, on average. That's based on user data on the website CreditKarma.com.

The numbers actually contradict reports from November, when consumers took out more than $20 billion in debt, the most since two months after the Sept. 11, 2001 terrorist attacks. But they also come at a time when the economy added about 200,000 jobs.

Illinois consumers ranked among the highest states in average consumer debt. The article also reports that the average mortgage debt nationwide was $173,876. Some states were higher than others. Combined with mortgage debt, the average consumer in America is saddled with $210,236 in debt. That's down only 1 percent from 2010.

The article doesn't mention how consumers dropped this debt, but it's likely that the million or so people who filed for bankruptcy protection probably were a main factor in putting a dent in those numbers.

That's because when people file for bankruptcy in Chicago, they are able to discharge years of built-up debt. That means everything from credit card debt to medical bills and other types of loans.

Consumers are then allowed to create a better future because they lose the debt that has kept them making minimum payments and being hit with late and hidden fees. The high interest rates that lenders charge are designed to keep consumers indebted to them as they struggle each day and each month.

That's why those who have gone through bankruptcy report it gave them a freeing feeling. It allowed them to get rid of debt that has burdened them with headaches and heartache for years. The laws are designed to help people get on their feet again, even when it seems like there is no help in sight and nowhere to turn.

Our Chicago bankruptcy lawyers are prepared to help any consumer having financial problems. Bankruptcy may be a sound option, but there are different types of bankruptcy filings that may be beneficial. There could also be other financial services that require the aid of a lawyer to help consumers get the most help if they are in a tough position.

Continue reading "Chicago Consumers Reduced Credit Card Debt By 11 Percent in 2011, But Did Bankruptcy Help?" »

The head of the Chicago Fed said in a recent statement that he believes unemployment could increase in 2012 and the end-of-the-year decreases in joblessness in 2011 could be temporary.

This would be bad news for our national economy, but also our local residents, many of whom have struggled with joblessness as the number of available jobs has shrunk. Our Chicago bankruptcy lawyers recognize that unemployment has been a major factor in why people have gone into debt.

Along with medical bills and predatory lending practices, unemployment is a major factor in why people consider filing for bankruptcy in Chicago or elsewhere. These laws were written with consumers in mind and they give them the advantage of being able to shed years of debt.

When people are out of work -- in Chicago, the unemployment rate sits at 9.8 percent, higher than the nation's 8.6 percent for November -- they need some source of income. Typically, that comes with loans or the use of credit cards.

But that can only last so long. Making a minimum payment on a credit card bill is simply going to keep the individual or family stuck in a mound of debt. Sadly, this is the cycle that credit card companies prefer. They recognize that their efforts to brand bankruptcy as a negative use of the law will keep many consumers making minimum payments.

This allows credit card companies to rack up payments with higher interest. Or, they can make these debts more attractive to investors, who purchase them from the credit card companies, hoping to make money off of consumers who are struggling with debt. Either way, the goal is to keep consumers indebted to them.

And a major reason so many American consumers are tied to these companies is because they have lost their jobs and can no longer make full payments. According to the Chicago Fed, this problem may continue in 2012.

The private sector added 200,000 new jobs toward the end of the year, though the estimates were supposed to account for non-seasonal jobs. The retail and hospitality industries hired most of those people.

The head of the Chicago Fed told Indiana bankers that they shouldn't get too excited about the recent uptick in job growth, yet shouldn't pull back in opening up credit to borrowers if the market fluctuates, either. He said that last year, the economy improved, but then fell back after the Japanese tsunami, oil prices rising and other factors.

This certainly isn't good news, but it's to be expected. Most analysts didn't believe that just because more jobs were added in late 2011 that meant 2012 was going to be a banner year for the economy.

As people struggle to find work, the worst thing that could happen is those investing in the stock market panic too quickly, which causes companies to clamp down on hiring and banks to shut down their lending practices. This causes problems for all of us, but even more for those who are trying to find a steady job.

Continue reading "Chicago Fed Believes Unemployment May Increase in 2012, Making Need for Chicago Bankruptcy Higher" »

Consumers racked up billions in debt in November, the highest mark in this country since just after the September 11, 2001 terror attacks, USA Today reports.

Some analysts believe this is good news, but our Chicago bankruptcy lawyers believe that as lenders become looser in their standards for borrowing and consumers become more dependent on credit cards and other loans, our country will spiral further into economic problems.

Many of the clients we represent in Chicago bankruptcy proceedings have been hit hard by unemployment, major surprise medical bills and predatory lending practices that have pushed them hard into debt. Many have relied on credit and various loans as a way to get by day-to-day.

And may others have learned that this can lead to major debt problems that require the help of bankruptcy laws designed to help consumers who get into debt problems. These are laws that are supposed to help consumers, though they have a negative stigma attached for some people.

The bottom line is that millions of Americans have used bankruptcy laws to their advantage because they recognize how these laws can help their finances. Clearing out the debt that has caused so many problems allows individuals and families to improve their monetary situation.

According to USA Today, Americans owe $2.48 trillion, not including mortgage debt, which is likely much higher. In November, Americans took out more than $20 billion in debt, the largest amount since November 2001, a few months after the September 11, 2001 terrorist attacks. In that month, Americans took out more than $28 billion in debt.

Some analysts believe this shows the American people having a "growing confidence" in the nation's economy. But others believe it shows consumers were more willing to use credit to take advantage of holiday discounts or end-of-year vehicle deals.

Others believe that while there have been improvements in unemployment numbers, it hasn't been enough to support a vast increase in spending. This means that people are relying more and more on credit because they have less income than in years past.

Reliance on credit cards can be a slippery slope for many consumers. While most Americans wouldn't be able to survive without some form of credit or loan, sometimes they can get out of control and this is spurred on by the credit card companies themselves.

They push out more and more plastic, even to consumers who already have a large number of cards. They promote their "perks" and "rewards" systems, which are often unattainable or not worth the cost of adding debt.

And all companies have forms of hidden fees and increasing interest rates when payments are late or missed, which can keep consumers in a constant battle to get out of debt. These practices can constantly frustrate consumers and many lean on bankruptcy in Chicago, which has been under attack from these companies because they know how helpful it can be to consumers.

Continue reading "Chicago Consumer Spending Hits 10-Year High In November" »

The story of a paralyzed Illinois athlete shows how we all are vulnerable to massive debt based on major medical bills and how Chicago bankruptcy can help.

Our Chicago bankruptcy lawyers have watched how health care costs in this country have continually risen, putting families in the precarious position of paying these massive bills or choosing to pay other bills, such as a mortgage, grocery and credit card debts.

The bottom line is that people often feel like they should pay for major medical bills over other types of bills, even if they are struggling to get by. That's because they feel indebted to the people who improved their health. But what consumers must recognize is that the health care industry is a business. While its roots are in helping people, companies charge so much money for even minor procedures it's obvious they care more about making money than helping people.

When a person gets saddled with a big medical bill, it doesn't take long for hospitals and specialists to start calling. When their deadlines for payment pass, they enlist collection agencies to quickly start calling and sending mail to harass the patient, who is likely in recovery mode.

If it's a major illness or debilitating disease that requires ongoing treatment, it may take the person long to complete that process and the last thing they are thinking about is paying a bill. They need to recover or get enough strength to get well. Yet, missed payments can begin building up and that can damage a person's credit score.

So, what can help? Completing a Chicago bankruptcy eliminates medical bill debt, as well as credit card debt and other unsecured loans. While people may feel bad about filing for bankruptcy to eliminate these debts, consumer-based bankruptcy laws are there to help people who get into debt. They have helped millions of people in the past and continue to do so today.

Take the case of Rasul "Rocky" Clark, who recently passed away in Robbins, Illinois. He was paralyzed during a 2000 high school football game when he was tackled on the field. He recently died at age 27 after undergoing surgery, the Associated Press reports.

The article goes on to state that in the nine months following that fateful day when he was tackled by the shoulders and hit his head into the ground -- breaking his neck in two places -- he did rehabilitation work. In just nine months, those medical bills totaled about $1 million.

The school district where he played football had a $5 million insurance policy that was paying for his car, though the district stopped paying last year. He then was forced to rely on Medicaid and his mother, who performed the work previously done by three nurses.

Chicago-area sponsors, including the Chicago Bears and Chicagoland Sports Hall of Fame, made donations to keep him going, but he died 11 years after the accident. Doctors said his chances of surviving a decade or more were 10 percent.

To think that in nine months, medical bills shot up to $1 million and he was in care for 11 years is unbelievable. But if your child was severely injured, you would do the same thing. And perhaps a consequence would be toiling in major medical bill debt while trying to provide the best care possible for your child.

Chicago bankruptcy can help in extreme cases such as this or even more minor cases where families are still dealing with tens of thousands of dollars in debt that is making paying bills impossible.

Continue reading "When Medical Bills Reach $1 Million, Need for Chicago Bankruptcy Obvious" »

CNNMoney recently reported that foreclosure filings fell to their lowest level since 2007 last year, but experts don't believe this is the beginning of the end for foreclosures in Chicago or nationwide.

Our Chicago bankruptcy lawyers recognize that foreclosures are a major problem for many homeowners throughout Illinois and the rest of the country. Falling behind on payments is made more difficult when banks are unwilling to work with the borrowers that made them millions of dollars during the housing boom.

Rather than offer loan modifications, the banks tell homeowners to try to enter programs offered by the banks themselves or by the federal government. While homeowners hold out hope they can salvage their home, the bank continues taking note of missed payments. After months of trying to get bank officials to help, they often will tell homeowners they don't qualify for programs because they either didn't submit paperwork or didn't do so on time.

This has been a common problem that many Chicago homeowners have faced. But the good news is there are options to help distressed homeowners whose mortgages are underwater and who are considering a strategic default. Chicago bankruptcy is one such option.

Even when homeowners believe there is no help in sight and the bank has already started the process of foreclosing on their home, bankruptcy can help. By filing for bankruptcy, homeowners stop the bank from completing a foreclosure while the bankruptcy process is ongoing.

Bankruptcy allows for homeowners to discharge many debts, including many types of loans and credit card debt that has a family's money tied up. Once that debt is gone, it can allow homeowners to work out a deal with banks to give them time to again begin making payments on their home loan. Sometimes, banks will agree to waive fees associated with late payments if the distressed homeowner agrees to begin paying again.

This may be helpful for many residents who are struggling with foreclosure. And don't let recent news fool you. Despite a decrease in foreclosure filings, there are still millions of homes that are steeped in foreclosure because of job loss and the struggling real estate market.

According to CNNMoney, 2011 foreclosure filings and repossessions fell to 2.7 million, a 33 percent drop and the lowest level since 2007. One in every 69 homes nationwide had at least one foreclosure filing in the last year. Another 800,000 homes were repossessed.

In the last five years, statistics show that nearly 4 million homes have been taken away through foreclosure proceedings. While some may get excited about the lower numbers analysts don't see this as a trend. In fact, most believe that the lower numbers are simply a result of delays in processing based on banks using "robo-signing" tactics they were caught using in late 2010.

Government programs report they have started about 5.5 million mortgage modifications since 2009, yet experts blame those programs for part of the problem with the foreclosure mess. Many people who attempted to use those programs fell back into foreclosure later on after the program failed to help them.

Nevada has still been the hardest-hit city in the country, where one in 16 houses received a default notice in 2011. California put 7 of the top 10 worst foreclosure cities on the list, while Phoenix and Nevada rounded out the top 10.

Continue reading "Foreclosures at Lowest Level Since 2007 Yet Chicago Bankruptcy Still Being Used to Stop It" »

As we head into 2012, there has been relatively little progress in terms of helping people work their way out of foreclosures that have ruined our real estate market and economy.

In November, Cook County had 7,412 foreclosures, according to foreclosure tracking website RealtyTrac. That's a large number of people who have had to deal with such a difficult situation and for many of those people, considering bankruptcy in Chicago may be a good option.

Some people see bankruptcy as a last option. But others, including our Chicago bankruptcy lawyers understand that these laws provide distinct advantages to consumers. They are designed with consumers in mind and can be used strategically to help people get out of financial problems. Donald Trump has filed for bankruptcy four times!

The Chicago Tribune recently reported that there are an estimated 3 million homes nationwide where the mortgage is seriously delinquent, or the homes are in the foreclosure process, are bank owned or are being repossessed. Recent statistics suggest that foreclosures are on the rise, as well. There was a 21 percent uptick in foreclosure filings in the third quarter of 2011 compared to the second quarter, which experts believe shows banks are taking a more aggressive approach to taking people's homes away.

In Chicago, city leaders are attempting to turn foreclosed houses into viable rental properties by searching for people who are looking to rent rather than buy. Officials hope that a new program that attempts to turn empty housing units into rented homes will help the local economy.

But bankruptcy has its benefits. For instance, filing for bankruptcy in Chicago immediately stops a foreclosure. Recent studies have shown that it takes up to two years in some cases for a foreclosure case to become finalized. That's from the initial default notice to the house being officially taken away from the homeowner.

So, in that time frame, at any point, the foreclosure process will stop if a person filed for bankruptcy. The lenders get notice that a bankruptcy has been filed and must stop the process. In most cases, a family can stay in the house throughout the bankruptcy process as well.

This can be a big help to many families who are having a tough time making payments. If they are missing monthly mortgage payments, it's likely that they are behind on other bills as well, including credit cards and other monthly expenses.

If this is the case, it's likely their credit scores are getting pinged with these late or missed payments. Once consumers begin making minimum payments on some loans, hidden fees kick in, which can serve to keep people struggling with debt.

It's likely that after completing the bankruptcy process and discharging other types of debt, a family could begin paying for their home again after hanging on to it while the process is ongoing. The alternative may be attempting to negotiate a loan modification with an unforgiving bank that is more interested in foreclosure than taking the time to try to help.

Continue reading "How Chicago Foreclosures and Bankruptcy Go Hand in Hand" »

Everybody makes New Year's resolutions and the joke is that most end up being broken within a few weeks. But one to consider and put in an effort to keep is getting your finances in order. In some cases that could mean Chicago bankruptcy is the best option.

If your expenses are out of control after a few months of free spending, it would be wise to set up a free consultation with an experienced Chicago bankruptcy attorney, who can assess your situation and help you deal with your financial issues. Our lawyers understand the power of these laws and what kind of protection they can provide consumers. These laws are designed to aid consumers who have gotten into a difficult financial situation.

Making wise money decisions and tackling these issues before they become major obstacles often is the best way to tackle money matters. Other times, unforeseen issues, such as surprise medical bills or job loss, can ruin a person's credit and finances and escaping it can seem impossible.

Like weight loss and quitting smoking, there are precise steps that a consumer can take to rework their finances. These are doable goals that can have long-lasting benefits to a person and their family.

There are some easy tips that a consumer can take to cut back on expenses and improve their finances:

• Lose some weight, which can improve your insurance premiums


• Clip coupons and become a smart shopper


• Simplify your finances


• Don't be in the dark about financial issues


• Plan for the unexpected


• Pay down your debt


• Set up a budget

Holiday spending may be the last straw. Or dim job prospects in 2012 may make finding a way out seem hopeless. The consumer is left with big bills and no way of getting the money back. It's time to get serious and look at the options. No one wants to start 2012 on a bad note financially. It can set the tone for the rest of the year, which can be made even longer.

An option to consider is bankruptcy. These laws give consumers protection from creditors. Whether it be credit card companies, department store companies that issue credit or other types of loans, these corporations understand that they can only make money if they get paid back for what they loan out, plus the interest that accrues over time.

It may be prudent for a consumer who now is stuck with big merchandise bills to look at the possibility of bankruptcy in order to straighten out their finances. An experienced Chicago bankruptcy lawyer understands that bankruptcy can help in many ways, depending on each individual circumstance.

The start of the new year is for new changes, new beginnings and a fresh start on what was, for many, a bad 2011. Don't allow 2011's mistakes to carry over into 2012. Take charge of your finances so you can start off strong in the new year.

Continue reading "Make a New Year's Resolution To Get Your Finances In Order With Chicago Bankruptcy" »

A recent Wall Street Journal article reported that billing disputes with credit card companies is the No. 1 complaint filed by consumers.

Credit card companies have scores of problems because of their business model. As you have likely seen, they have spent significant money filming commercials this holiday season promoting perks, rewards and cash-back options for people who sign up.

But as our Chicago bankruptcy lawyers know, these perks and rewards don't come without a price. In most situations, the credit card companies require a certain amount of money to be spent before those perks kick in.

In some situations, a person has to hit a spending threshold and pay it back in a short time period before they can get the "perks." But many people with lower credit scores may not even qualify for the perks or they may have to jump through hoops in order to reap the benefits.

All of this can lead to a person using Chicago bankruptcy protection laws to their advantage. Many consumers get caught up buying into these great "deals" that credit card companies offer, but make no mistake, these companies know how to make money.

Credit card companies offer these deals to get as many people signed up as possible. The debt is sold to investors, who can make money off the interest. It's very unlikely that these companies have any desire to lose money on their perks deals, so keep that in mind.

The more a consumer spends, the more they end up indebted to credit card companies, who then jack up interest rates and charge fees, many times wreaking havoc on a person's finances.

But bankruptcy laws were created to help people in this type of position. Filing for bankruptcy stops credit card companies and the debt collection agencies they hire from harassing you and after completing the process, the debt that has been amassed over time can be wiped clean.

The Wall Street Journal reports that billing disputes were No. 1 atop more than 5,000 complaints filed with the U.S. government agency that enforces consumer financial laws.

The Consumer Financial Protection Bureau plans to use data on consumer complaints to provide insight to the nation's biggest credit-card issuers, including Bank of America, American Express, CitiGroup, Capital One and JPMorgan Chase.

More than 4,000 complaints were turned over to companies for a response. The agency is attempting to help consumers at a time when credit and finances are still being watched in Washington, D.C. The agency was a part of the 2010 Dodd-Frank Act.

Consumers need a voice when credit card debt makes their lives difficult. Sometimes, a Chicago bankruptcy lawyer can be that voice.

Filing for bankruptcy terrifies lenders because they know their chances of getting much money back has just dwindled. And millions of Americans each year are taking this step toward financial freedom. Don't let credit cards ruin your life.

Continue reading "Billing Disputes Highest Among Complaints of Chicago Consumers " »

If you're planning to get together with family this holiday season, when you're sitting around the table, take a look around.

Is it possible that poor financial planning by one of your relatives could turn your world upside down? A recent Wall Street Journal article looks at the financial implications of relatives and how Chicago bankruptcy could be beneficial to those stuck in a bad spot.

In many cases, family and business don't mix. Borrowing money, co-signing for loans and otherwise getting involved in another person's financial affairs can cause stressful situations. As the article points out, that can lead to financial ruin.

If attachment to another person's money has gotten you into a mess, our Chicago bankruptcy lawyers would advise you to get legal representation fast. Depending on the circumstances of your situation, bankruptcy could be a good option.

The Wall Street Journal story looks at the issue through the eyes of a financial planner. She relayed the story of a man who was recently retired and had come to her for advice.

His situation was a bad one. He had just retired and had plans of a leisurely life filled with travel and easy times. But suddenly his son-in-law died of an aneurysm. In an instant, that changed his life.

The man had borrowed hundreds of thousands of dollars to start a business, but didn't have a life insurance policy. This lack of planning put the retiree's daughter -- and her three small children -- into a bad situation.

The financial planner said there was little she could do to help him, but it taught her to help clients in the future screen for potential risks. Ultimately, the situation served as a reminder that insurance is important.

The financial planner asks future clients if there are people in their extended families who they could see showing up on their doorstep asking for money. Is it possible clients will have to support their parents in the future? Is there a history of medical problems that could lead to problems down the road?

If a person co-signed on an in-law's business or even a student loan for a niece or nephew, you could end up getting stuck if they have a major medical issue or end up in a bad motor vehicle accident. This is especially true if the loan is long-term.

While all of this may seem harsh, it is designed to shield your immediate family from a financial crisis. It isn't very far-fetched to see that these types of in-family money deals can lead to serious problems if not handled correctly.

In some cases, such a situation could lead to a person facing thousands in debt that they aren't prepared to tackle. If they have bad fortunes of their own -- job loss or major medical bills -- they could be in for a rude awakening financially.

Filing for bankruptcy in Chicago may be a way to get out of a bad situation like this. Bankruptcy protection is designed for people who get in over their head in debt -- whether their fault or not. This would be a case where bankruptcy protection could end up helping someone who has thousands in debt thrust upon them without warning.

Continue reading "Family Members' Poor Financial Planning Could Cause You to Look at Chicago Bankruptcy" »

A look at recently calculated bankruptcy numbers shows that while the volume of Chicago bankruptcy filings is down lately, there are still many people who have discovered the value of these consumer-driven laws.

According to numbers released by the American Bankruptcy Institute, nearly 14,000 people filed for personal bankruptcy protection in the Chicago area alone in the third quarter of 2011.

Our Chicago bankruptcy lawyers realize that is a large number, despite a slight drop from earlier in the year. It means that many Chicagoans understand that bankruptcy protection can help them get rid of the debt that has dogged them for years and it can give them a brighter future.

Rather than toiling in debt, dealing with harassment from creditors and wondering how one might pay his or her bills, bankruptcy stops creditors from calling, allows the consumer to eliminate the debt that has piled up over the years, and be better prepared to tackle unexpected problems down the road.

In the summer period of 2011, 13,750 people filed for bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois. That number dropped slightly from the 15,020 who filed in the second quarter. The peak came in mid 2010, when 16,768 people filed.

The Northern District handles the vast majority of bankruptcy cases in the state of Illinois. In comparison, the Central District handled 2,033 cases last quarter and the Southern District only 1,304.

While most of the cases in the state are handled by this one court, the total number of cases in Illinois shows a big story about the struggles going on right now. There were 17,573 total filings in the last quarter in Illinois, good for the fourth highest number of filings among states. Even Texas, much larger in area and population, had 4,500 fewer filings.

And a deeper look at the type of bankruptcy people are filing shows an interesting trend as well. In the third quarter nationwide, there were 223,577 Chapter 7 bankruptcy filings and 102,900 Chapter 13 bankruptcy filings. That means Chapter 7 filings make up 69 percent of personal bankruptcy filings. That is the lowest percentage in more than a year.

Chapter 13 bankruptcy in Chicago is for people who have assets they wish to protect while still getting bankruptcy protection. They can set up a payment plan to keep their houses and vehicles and pay back a portion of debt. Chapter 7, still the more popular choice, allows people with few assets and little income to lose their debt, and sometimes what few assets they have, though there are exemptions.

There are many people looking for answers in this tough economy. Save from winning the lottery -- with its nearly impossible odds -- there aren't many ways a person in debt is going to all of a sudden get out. Bankruptcy can be that solution.

Continue reading "Chicago Bankruptcy Filings Dip Slightly, But Remain High In Tough Economy" »

Some people may end up getting a summons and complaint via certified mail from a creditor if they have fallen behind on their bills.

They see the court date, mark it on their calendar and store the paperwork away in a folder where they store important documents. While they see the notice is dealing with their finances and the money they owe, they don't read it carefully.

It's not for several weeks that they see the error of their ways. They see they are making less and check their pay statement closely -- discovering that the company that sent the summons to appear in court has already been taking away their money, up to 25 percent!

But this is legal. In many states, a person who is in debt and who has stopped making payments can have their wages garnished even before they appear in court. Depending on the wording of the summons and complaint, they may be forced to respond via a counter claim or a legal answer in order to avoid the garnishment.

That's why consulting with an experienced Chicago bankruptcy lawyer as soon as possible is so important. This area of law is complex and it has obvious long-term implications for people who are struggling with debt.

The good news is that wage garnishment, as well as foreclosure and other debt problems, can be stopped by filing for Chapter 7 bankruptcy in Chicago. By filing for bankruptcy, the wage garnishment immediately stops. The creditor harassment and other actions must now go through the court system instead of directly through you.

This protection is a big advantage for debtors, especially when that 25 percent of their salary is all that's keeping them going from day to day. And on top of that initial protection from creditors, consumers can then discharge all or most of their debt through the bankruptcy process.

A woman recently wrote in to creditcards.com to explain her situation. The woman and her husband had recently gotten behind on some bills and they received a summons and a complaint. They prepared for the court date, but then realized that the husband's paycheck was smaller. They took a closer look and realized that their creditors had already begun taking some money from them.

While this doesn't seem right, it can be legal. In many situations, the complaint and summons will contain language that requires them to respond within a certain time frame. Failure to file the required legal paperwork within a certain time period means the company can begin collecting money.

There may be a scenario in which a consumer can ask a judge for a modification if the garnishment is making living difficult, but it's possible that the judge won't do anything until the court date, which could be months off.

In overburdened court systems, there may be little a person can do until he or she steps in front of a judge on the appointed court date. Filing for bankruptcy immediately stops garnishments. And if, after consulting with a Chicago bankruptcy lawyer, the decision is made to file, it's possible to stop wage garnishment before it happens.

Continue reading "Wage Garnishment in Chicago Can Be Stopped By Filing For Bankruptcy" »

For those who have had to deal with creditors and hired collection agencies hounding them for money know how frustrating and stressful it can be.

Many people stuck in that situation develop psychological problems from getting dozens of automated calls a day, sometimes calls from real people, e-mails, calls at work, to co-workers and mail every day requesting money and making threats.

It can send people into a tailspin mentally. Our Chicago bankruptcy lawyers have heard horror stories from clients who have had to deal with these aggressive tactics and how it has affected them.

Filing for Chapter 7 bankruptcy in Chicago immediately stops creditors from harassing the consumer. They are directed to make inquiries with the court where the bankruptcy was filed and the borrower no longer has to deal with the harassment.

Creditors hate to hear the word "bankruptcy" because it means they have lost the upper hand. When consumers file for bankruptcy, they have taken away the power from the banks and lenders. When bankruptcy isn't on the table, they can go after consumers day and night.

Many people succumb to the demands and make a feeble minimum payment. All this does is kick in more fees and higher interest rates that are sure to further injure the person or family's finances. This is what the credit card companies want.

But by filing for bankruptcy, the lenders must now jockey among each other for what they can get in bankruptcy court. Sometimes, that means selling some assets to pay back debt. Sometimes, you can get out of the debt for nothing and the creditors get nothing. Each case is different.

In the case of an Upstate New York musician highlighted by The Wall Street Journal, his best investment was a caller ID box with a ring controller. It allowed him to avoid the 40 to 50 automated calls he was getting each day.

This allowed the man to get some peace while he was dealing with his debt. Rather than falling prey to their tactics and sending in a minimum payment, he stopped paying. According to the article, he got through three months and in the following two months, he got letters from creditors offering a settlement of about 50 cents on the dollar. After receiving the letters, he went back and negotiated. He ended up paying about 31 cents on the dollar in an agreement.

If people don't cave in and make a minimum payment, many will end up falling for a debt-relief scam -- paying companies to negotiate on their behalf. But those companies have no more power than the debtor does. Luckily, new laws have stopped those companies from charging up front fees based on the amount owed.

Bankruptcy helps consumers avoid all of these traps. Filing and successfully going through with bankruptcy can wipe out debt and allow people a fresh start to come up with a financial plan that works.

Continue reading "Debt, Collection Agencies Take a Toll, But Chicago Bankruptcy Eases Frustration" »

Finally some good news from the economy -- CNNMoney is reporting that 120,000 jobs were added in November, bringing the unemployment rate down to 8.6 percent.

While that's still high and most attribute the increase to seasonal hirings, it's possible that many people who began working for retailers this winter for the holiday shopping season will continue in a full-time role after the new year begins.

Our Chicago bankruptcy lawyers believe this is encouraging news because there are many people struggling with foreclosure and medical bills, or who can't make ends meet because of unemployment. Not having a steady income, or relying on the government for assistance is no way to live.

But many people who are still without a job and who are teetering on the edge, fending off creditor calls, trying to figure out how to pay bills, make the mortgage payment and get by, may consider filing for bankruptcy in Chicago.

Bankruptcy allows for people to have their debts forgiven, even if they have struggled for years with money they owe. Predatory lending practices that lead to high interest rates and hidden fees have trapped many Americans, especially many who have been battling to find a job for the last few years.

For those who are fortunate to have just gotten a job, bankruptcy may help, too. If you have spent the last several months or most of the last year looking for a job, it's likely you have been relying on some form of credit, whether plastic cards or a loan.

If that's the case, now that you are employed, filing for bankruptcy can wipe out that debt and help you get back on your feet again. If the debt is still lingering, you may be forced into wage garnishments or other harassment. But getting rid of the debt will allow you to put your new earnings strictly into current bills instead of past ones.

According to the news story, employers added 120,000 jobs in November, up from 93,000 in October. Some experts expected 110,000 jobs to be added, so the numbers are encouraging.

A majority of the jobs added were in the private sector, as the government dropped 20,000 jobs last month. In retail, 50,000 jobs were added, half of which were at clothing and accessory stores. Restaurants and hospitality places added another 22,000 jobs.

CNN reports that 13.3 million people still remain unemployed and 43 percent of those people haven't had a job for six months or more.

Our lawyers hope that those reading this have been able to find and maintain a steady job. If not, you likely have been hit hard with debt and may need to consider filing for bankruptcy our consulting with an experienced Chicago bankruptcy lawyer to look at other debt resolutions. If you have a job, but were previously unemployed, bankruptcy may help, too. A free consultation could benefit you.

Continue reading "November Jobless Rate Decreases, Jobs Added in Chicago, But Bankruptcy Still An Option" »

The Wall Street Journal recently published an article that looks at common mistakes made by widowers and widows that can lead to major financial problems. The advice column attempts to help those who have lost a spouse get through that difficult time.

Chicago bankruptcy lawyers understand that people who have lost a loved one not only go through a difficult time emotionally, but possibly financially, too. There are tax implications and other issues that can cause a person to become overwhelmed financially.

One of the man issues for a couple that is split up because of death is the debt left behind by the spouse who dies. For couples whose finances are handled separately, this debt can lead to major problems for the person who survives. While they may be inclined to use retirement funds or investment money to try to get a quick fix, that's not always the best solution.

A person in this position may consider bankruptcy in Chicago rather than losing all they have. Bankruptcy laws are designed to help the consumer who is struggling to get by, and a widow who is overwhelmed with bills, debt and financial issues may qualify. Consulting with a lawyer immediately is a smart move if you find yourself in this position.

Here are some common mistakes for people in this situation:

Paying IRA penalties you could have avoided: You can roll an inherited IRA into your own and some do it automatically unless the survivor intervenes. If you're older than 59 and a half and can avoid the 10 percent penalty on early withdrawals, that may make sense.

But the median age for widows is younger than that age cutoff and they may need the IRA money to pay bills. It may be smarter to roll the money into an inherited IRA, which remains in the spouse's name until they transfer it into their own when they reach the right age.

Inherited IRAs usually require people to make a withdrawal every year based on life expectancy. But if the deceased was not 70 and a half, the survivor doesn't have to take required distributions until the year the deceased would have hit that mark.

What about portfolios?: You don't have to necessarily keep the same stocks your spouse had. If the survivor is more risk-oriented or wants to play it safe, he or she can. Widows or widowers should assess their own situation and move the assets into investments that fit their new situation.

Estate tax hurdles: Estate taxes are complex and it's best to consult with an expert before making any decisions. Under federal law, spouses can use "portability" to double a $5 million estate tax exemption to $10 million, but estates valued at under $5 million still require a tax return.

Portability ends in 2012, but some expect Congress to make the option permanent. Still, filing an estate tax return when it's not necessary can cause problems. And states have different rules regarding estate taxes as well.

Don't collect Social Security too soon: At 60, a surviving spouse can collect Social Security survivor benefits, but they will get less than if they wait until the full retirement age.

As with anything, it is best to consult with an expert in a situation like this. If you have no reason to worry about $5 million estates being left in your name, but worry more about a $150,000 in debt being left by your spouse, maybe you should forgo the financial planner and consult with an experienced Chicago bankruptcy lawyer today.

Continue reading "Survivors Can Avoid Financial Mistakes, But May Be Able to Use Chicago Bankruptcy to Their Advantage" »