Peter Francis Geraci A Bankruptcy Blog - Chapter 7 & 13

When the housing market was booming, many homeowners took second mortgages against their homes. The idea was to take a loan for renovations to increase the overall value. After the market crashed, many of the homeowners were left with a high interest second lien against an underwater property.

 

Second mortgages have a lower loan modification success rate. A second mortgage is paid after the first lien and takes second priority. Mortgage companies will not modify a second mortgage if the property is underwater.  

 

When the value of a home is less than the balance of the first mortgage, the second mortgage becomes unsecured. There is no equity to support the balance of loan. Short sales and foreclosures could leave an owner with a large deficiency.

 

You can file a Chapter 13 and consolidate the balance of the second mortgage with zero interest. You can discharge the balance after the plan and strip the second lien. By eliminating the second mortgage payment, you can pay down the balance of the first much quicker.

 

A Chapter 13 bankruptcy with Geraci Law is the best modification you can apply for!

According to a report by Trulia, only 2% of women prefer dating men who rent over who own (for men it was six times preferred an owner to a renter). If you have debt and want to be attractive to the other 98% of women, filing a Chapter 7 with Peter Francis Geraci could be your solution. Filing a Chapter 7 bankruptcy could eliminate your obligation to debt – allowing you to save money to someday purchase a home.

 

You can actually qualify for an FHA loan in as little as two years after filing a Chapter 7 bankruptcy. You can also save up for a down payment on a home loan by eliminating your minimum payments each month.

 

This Valentine’s Day, consider filing Chapter 7 with Geraci Law. You can have a fresh start to rebuild, become a homeowner and be debt free with your valentine!

Finding a bankruptcy attorney should not be difficult. When you are dealing with your finances and your financial future, you want an experienced attorney. Bankruptcy is complicated – you want an attorney who knows what they are doing.  A Chapter 13 bankruptcy will cost you the same anywhere you go – so why not go with the best?

 

There are many talented attorneys but no one in Illinois, Indiana and Wisconsin files more cases than Geraci Law. Attorney Peter Francis Geraci has over 30 years of bankruptcy experience. Geraci Law Attorney hold licenses in over 85 states and have over a million hours of new bankruptcy law experience.

 

There are too many instances of debt being mismanaged. Schemes like debt settlement and negotiation fail. Do not be afraid of calling a Geraci Law attorney. Our will determine the best way to protect your assets and discharge your debt using federal law.

Missed payments, judgments, and collections can cost you a job. According to a study by the Society for Human Resource Management, six out of ten employers do credit checks on job applicants. So if you are ignoring creditor calls, it’s time to do something about it with Geraci Law.

 

Employers do not want to deal with your creditors. Collection agencies have been known to call employers looking for you. If your debt gets to the point of a wage assignment or garnishment, your employer will have to deal with handling the deductions. It is additional work and could be means for termination or a missed job opportunity.

 

Filing a bankruptcy with Geraci Law can eliminate the obligation to pay your debt. Your creditors must STOP calling you, your family, and your employers. A case with Geraci Law can be filed in as little as one day for as little as $281. Because your debt is handled, the stress with owing is also eliminated (allowing you to focus on work). After receiving a discharge, you can reestablish your payment history and actually rebuild!

 

 

Many people will borrow against a retirement account to pay off debt.  A person can borrow but it must be enough to pay off the balance. Otherwise, you are paying a high interest loan on top of other payments to creditors.

 

The shaky job market is another problem if you are considering a 401K loan. If you lose your job, the loan can no longer be paid through your payroll. You will be required to pay back the loan in full. You may also owe taxes for the premature distribution. This is on top of the 10% tax penalty you pay with the original loan.  

 

If you want to pay the debt, file a Chapter 13! You can do a no-interest, no-penalty affordable repayment plan. You do not have to pay tax on the settled amount and your retirement is protected in case of an actual emergency.

 

An Illinois woman called Geraci Law at 2:50 p.m. because her house was going to be sold at a sheriff sale the following morning. She came into the Geraci Dundee office at 4:30 p.m. and met with Illinois Bankruptcy Attorney Jason Kara. Attorney Kara drafted the petition within a half hour and worked with Geraci Attorney Alyssa Davis to prepare the necessary documents.   

 

By 5:25 p.m. her case was filed. The paperwork was sent and the sheriff sale was stopped. When you hire a Geraci attorney like Attorney Kara, you receive the experience and timeliness that is difficult to find elsewhere.  This woman was able to go home and sleep soundly knowing she made the right decision with Geraci Law and Attorney Kara.

Many people will borrow against a retirement account to pay off debt.  A person can borrow but it must be enough to pay off the balance. Otherwise, you are paying a high interest loan on top of other credit card payments.

 

The shaky job market is another problem if you are considering a 401K loan. If you lose your job, the loan can no longer be paid through your payroll. You will be required to pay back the loan in full. You may also owe taxes for the premature distribution. This is on top of the 10% tax penalty you pay with the original loan.  

 

If you want to pay the debt, file a Chapter 13! You can do a no-interest, no-penalty affordable repayment plan. You do not have to pay tax on the settled amount and your retirement is protected in case of an actual emergency.

Stress and debt go hand in hand. Debt can cause you to lose sleep at night and fear answering the phone. The stress causes many people to bury their heads in the sand. Ignoring the problem is not the answer and often causes legal action by creditors.

 

Thankfully, there is a simple solution – file a bankruptcy! If you are at the point where you are losing sleep and ignoring phone calls, a bankruptcy is the cure. By filing a bankruptcy with Peter Francis Geraci and Geraci Law attorneys you can receive peace of mind.

 

A Wisconsin client who met with Geraci Law Attorney Brent Berning said:

 

Brent Berning made a humbling and embarrassing and tough time in our lives, felt like a breath of fresh air! He was extremely knowledgeable! He moved and worked his magic very fast but he made sure we didn’t move forward with any section without complete understanding. He shared some of his own personal life which made it that much easier to share our own. It was great working with him – makes me want to file for bankruptcy again in the future. But because extremely helpful class and personal advice and reassurance he gave us I’m positive we will never have to.

The majority of loan modifications fail. Mortgage servicers will tell you to stop paying your mortgage so you can qualify. Missed mortgage payments will negatively affect your credit score.

If you are qualified to get in a three month trial payment plan, you will be paying less than you regular mortgage payments. This means your mortgage company will report a late or partial payment again negatively affecting your credit score.

 

When a trial payment plan is denied, your mortgage company will want the remainder of the partial payments. If your mortgage company was $1,000 and you paid $500 in trial plan for 3 months, your mortgage company will demand the deficient $1,500 immediately and in full. Telling the servicer you were in a loan modification will not stop the collection nor will it stop a foreclosure.

 

In reality, very few homeowners are actually qualified for loan modifications. Even fewer are actually approved for loan modifications. If you have other debt, file a Chapter 7 bankruptcy with Peter Francis Geraci. You can eliminate the credit card payments each month and use the money to pay your mortgage.

 

If your loan modification has been denied, you will be in default on your mortgage and possibly facing foreclosure. Call Peter Francis Geraci regarding a Chapter 13 bankruptcy. You can stop a foreclosure and pay the arrears in a payment plan.

 

There is no guarantee with a loan modification. Bankruptcy with experienced Geraci attorneys in Illinois, Indiana and Wisconsin can be your guarantee to stay in your home.

It is easy to believe a short sale is the immediate solution to your housing problem. There are ads everywhere offering to short sell a house because it will protect your credit score. Realistically, if you are at the point of a short sale, you probably have fallen behind on your mortgage payments.

 

Late and missed mortgage payments will negatively affect your credit score. When calculating a credit score, there is no significant difference between selling your home at a short sale, signing a deed in lieu, or letting the house go through foreclosure.

 

So you have debt and a house you can no longer afford, file a bankruptcy with Attorney Peter Francis Geraci. By discharging your unsecured debt with a Chapter 7, you can also eliminate an obligation to pay any mortgage deficiency. You can stay at the house until it sold at a sheriff sale.  Until the sheriff sale (or short sale), your responsibility is home insurance and any association dues. Odds are home insurance and homeowner’s association dues will cost less than rent.

 

Bankruptcy is an opportunity for a fresh start. You can eliminate your obligation to the credit cards, medical bills and possible mortgage deficiency. Before you call a realtor about a short sale, call a Geraci Law bankruptcy attorney in Illinois, Indiana or Wisconsin. You will receive the best option for your individual situation.

If your resolution this year is to get out of debt, file a bankruptcy. People with credit card debt will try to settle the bills, waste a tax refund on paying a portion of the bill or ignore the debt completely. You could accomplish your goal this year and eliminate all of your debt with a bankruptcy with Geraci Law.

 

Many clients of Peter Francis Geraci and his attorneys at Geraci Law realize filing a bankruptcy was one of the best decisions they have ever made.

 

An Indiana client of Geraci Law Attorney John Sadler said, “Thank you for your kindness. You were there for me to get this Ch 7 going. You said all will be better when over; you were right, I do feel so less pressured. I wish you and all of your support team the very best. You handled my emotions and case so professionally.”

 

A Wisconsin client of Geraci Law Attorney Brent Berning said, “Wanted to Thank You for doing beyond your call of duty as you demonstrated thoroughness, care and understanding during one of the most difficult times in my life.”

 

An Illinois Geraci Law bankruptcy client said, “As I sit here with tears streaming, I want to let all of you know how grateful I am to all of you for your hard work. I am so BLESSED and will hold on to this forever.”

 

Many people are afraid of bankruptcy. It takes collection calls, garnishment notices and interest rate spikes before many people decide to call Geraci Law. There is no reason to be afraid of bankruptcy. It is the solution to your financial problems.

 

It Goes on My Record  

If collectors are calling and you have missed payments, your credit has already been hit. Payment history and debt-to-income ratios account for a major part of your credit score calculation. Filing a bankruptcy will eliminate poor credit history and you will have zero debt. You can actually save money and improve your financial situation.

 

My Job Will Find Out

Realistically, your employer does not care. Geraci Law informs thousands of employers each year to stop garnishments or deduct Chapter 13 payments. The stress associated with owing can disrupt your job performance. When the debt is eliminated, you can focus on work instead of your creditors. Payroll department often refer employees to a bankruptcy attorney because when a case is filed, they won’t have to deal with your creditors.

 

My Neighbors Will Find out I’m Broke

After missed payments and collections, your creditors may sue you. This means a sheriff will appear at your door to hand you a summons. If you file a bankruptcy with Geraci Law, your collectors cannot collect on the debt!

You might want to use your tax refund to pay down debt. But there could be a better option! You may be able to keep your refund for yourself, and file a Chapter 7 to eliminate all of your debt! Or, take care of all bills by using part of your refund in a Chapter 13 to lower your debt.

With Peter Francis Geraci, you can work out an affordable monthly payment plan. When you receive your tax refund, you can pay off your attorney fees and put the remainder into a savings account.

 

Paying minimums and settling debt is a Band-Aid for a wound. Instead of trying to settle a faction of your debt, you can eliminate all of your debt with a bankruptcy with Geraci.

 

A client came to Geraci Law to discuss his bankruptcy Meeting of Creditors. He was worried because his friend had gone to a “cheaper” attorney, but had to turn over his entire income tax refund of over $2,000.00 A high price to pay.

 

Our client, however, had nothing to worry about, because we had given him good advice!

 

When he first hired Geraci Law, experience supervising Attorney Robert Brynjelsen told him to change his exemptions so he could keep his refund! Thanks to Geraci Law, he was able to get more money from his paycheck and keep his tax return. Good advice is worth it!

 

Whether it’s the out of town family or broken Christmas lights, everyone gets stressed in December. If you have debt before Thanksgiving, trying to maintain minimum payments and budget for Christmas can stress anyone out.

 

During the holidays, credit card companies will offer promotions. Open a credit card and receive 10% off!  You’ll get a bill with 30% interest and an enormous minimum payment. Instead of taking on more debt, think about a bankruptcy.  By eliminating your credit cards, you can learn to budget within your means.

 

By the time New Years Eve comes around, you could be riding a sleigh to financial freedom. You can eliminate your credit card debt with a Chapter 7 or make one minimum payment with a Chapter 13.

 

This year buy yourself a gift and get out of debt with Geraci Law. We routinely file bankruptcy petitions in as little as one day to stop the stress.  So give us a jingle this holiday season so you can mark one New Year’s resolution off your list.

A woman called Geraci Law because she was being chased by the repo man. She had fallen behind on her car note because of adjustable interest rate spikes and job loss.  She started a new job and her financer refused to accept any payments.

 

She met with Wisconsin bankruptcy attorney Brent Berning and he was able to file her case the same day.  The repo man was sitting outside and she was able to provide her case number to stop the repossession. Her Chapter 13 payment is the same as her car payment and includes her other debt. Without the help of Geraci Law, the woman would still be driving in circles. 

Recently the President announced programs to help people with student loans including consolidation and maximum repayment amounts. Similar to HAMP and other loan modification programs, only a small margin of people will benefit.

 

The easiest way to afford your student loans is to file a bankruptcy with Geraci Law. By eliminating your debt with a Chapter 7 you are able to work a payment plan with your student loan financer. The money you are wasting on minimum payments can go toward paying down your student loans.

Attorney Peter Francis Geraci and his bankruptcy attorneys will work to eliminate your debt so you can save money! If you qualify for these programs, you can focus on a lower interest repayment plan with your student loans and your other debt will be eliminated.

 

 

 

A client came into Geraci Law office in Gurnee for a second opinion. He originally went to an attorney that was closer to his home. The bankruptcy attorney did not have Peter Francis Geraci/Geraci Law experience and told the client to file a Chapter 7 bankruptcy.

 

After a meeting with Illinois bankruptcy attorney Jack Shapiro, the client discovered he could save thousands more by filing a Chapter 13. His first attorney did not discuss stripping his second mortgage or the benefits of an interest-free repayment plan.

 

His Chapter 13 payment was lower than he was paying on his financed car and his second mortgage! Meeting with a Geraci Law attorney was the best financial decision this man probably ever made.

A woman came in and met with Peter Francis Geraci, Geraci Law attorney David Lugardo. She was struggling to stay current with her house payments and was in mediation with her mortgage company. Before meeting with a professional Geraci bankruptcy attorney, she was working with a non-profit agency assigned to her.

 

The agency suggested she withdraw from her 401K to pay a significant part of her mortgage arrears. She quickly learned how terrible the advice was and that mediation goes no where. After meeting with Illinois Geraci bankruptcy attorney, David Lugardo, the woman understood what she could do to save her house.

Mediation often fails and homeowners are left with enormous mortgage arrears. For this woman, she took money from her retirement and the settlement option failed. If you are worried about your mortgage, call Peter Francis Geraci.  The experienced bankruptcy attorneys in Illinois, Indiana and Wisconsin can determine your best option to save your home and protect your retirement.

 If you are looking for a law firm with attorneys who not only care about their clients but are well regarded in the bankruptcy community, look to Geraci Law L.L.C.  Supervising attorney Nathan Curtis was just appointed to serve a 4 year term on the Executive Committee of the Chicago Bar Association’s Bankruptcy and Reorganization Committee.  The Committee holds several Continuing Legal Education sessions and two 3-hour seminars each year.  Attorney Curtis is believed to be the first consumer debtor attorney to be asked to serve on the Executive Committee. 

 

Prior to serving on the Executive Committee, Attorney Curtis served a two year term on the Bankruptcy Liaison Committee for the Northern District of Illinois.  The Committee is made up of 12 bankruptcy attorneys, and includes representatives from the US Trustee and Chapter 13 Ttrustee, and several Judges attend the meetings.  The Committee promotes and sponsors social and educational initiatives.  Upon the end of his two-year term, Attorney Curtis was replaced by another Geraci Law attorney, Justin Storer. 

 

Additionally, Geraci Law attorney Andrew Golanowski was selected as one of the initial members of the newly-formed Bankruptcy Bar Liaison Committee for the Eastern District of Wisconsin.  The Bar Liaison Committee was designed to aid communication between members of the bankruptcy bar and the judges and court personnel.

When you hire a Peter Francis Geraci/Geraci Law attorney, you are hiring experience. Our attorneys are in court and in the community continuing to develop ways to protect clients and consumers.

 

The number of job cuts has doubled in September to 115,730 from 51,114 in August. Government workers dominated the planned layoff list. There are no safe jobs anymore and if you have debt, losing income can be devastating. Sometimes you do not qualify for unemployment and if you do the amount will be less than your paycheck.

 

If you are worried about your job, file a bankruptcy with Peter Francis Geraci. You can eliminate your debt and consult a Geraci bankruptcy attorney to determine your best option for your home and car.

The list of failures by the government for mortgage help continues to grow. Applicants are constantly denied and the requirements for are as stringent as a Harvard application.  Trusting the government to protect your home could lead you into foreclosure. Homeowners need to prove at least a 15% deduction of income and are ultimately denied.

 

Clients of Peter Francis Geraci do not lose their home unless they want to. Once the foreclosure judgment is entered, a loan modification is meaningless – a bankruptcy filed with Geraci Law will stop the foreclosure! Some Geraci clients are also able to strip their second mortgages. It’s the best modification you can apply for!

Attorney General Lisa Madigan filed four lawsuits against companies and attorneys charging up front fees for “guaranteed” loan modifications. Most of these companies had a combination of realtors and mortgage brokers processing loan modification paperwork.

 

The attorneys are able to charge up front fees, realtors are not. Consumers paid and oftern found themselves with a denied modification and a foreclosure summons. Most of the attorneys associated with the companies handled residential closings and were not specialized in loan modifications.

 

Many people fall for the trap – a loan modification is like a dog chasing a car. The dog wastes time and energy only to find out they will never catch a moving vehicle. A loan modification is NOT guaranteed.

 

But eliminating debt with a bankruptcy filed by Peter Francis Geraci is. If you have debt and are struggling to pay your mortgage, eliminate the minimum payments with bankruptcy. You can use the money to pay down your mortgage.

 

Do not fall for scam – call Peter Francis Geraci and his attorneys in Illinois, Indiana, and Wisconsin for your best options. To read about the lawsuits please click here.

There are hundreds of advertisements about refinancing before rates go up again. Some offer rates as low as 4%! Good luck. To refinance a home, you need to have paid down some of the principal balance. If you did not put down at least 20 percent on your mortgage, there is a very small chance you’ll be able to refinance for a lower rate.

 

So without paying down the principal balance and with home values steadily dropping, the 4% rates offered are as likely as a loan modification. Your best option is to file a bankruptcy with Peter Francis Geraci and his bankruptcy attorneys in Illinois, Indiana and Wisconsin.

 

Whatever you are paying in minimum payments each month is money you can put toward paying down your mortgage. You are able to put more money toward the principal. You can actually work on reestablishing your credit by making timely payments not taking on more debt.

A man came into Peter Francis Geraci’s Crystal Lake office and met with bankruptcy attorney Jason Nielson. Like so many people, he was laid off from work and fell behind on his mortgage payments. He applied for a loan modification through his mortgage company. He was denied a lower mortgage payment and help from his financer.

 

The client returned to work and could afford the house but not the arrears. His house was to be sold at a sheriff sale the following day. His mortgage company refused help so he called Peter Francis Geraci.

 

Illinois bankruptcy attorney Nielson met with the client drafted his paperwork and filed a Chapter 13 bankruptcy petition the same day. If you have a sheriff sale or are in foreclosure, Peter Francis Geraci attorneys can help you save your home. 

 

If you have a job offer and have debt, it’s time to file a bankruptcy. Your creditors cannot garnish unemployment benefits - but the deduction could be waiting on your first paycheck.  Call Peter Francis Geraci to file a Chapter 7 bankruptcy. Geraci attorneys can file a case in as little as one day.

 

You can eliminate your debt and enjoy your new income. Life after bankruptcy is about saving money! Peter Francis Geraci and bankruptcy attorneys eliminate debt so you can put the minimum payments in a savings account.

A couple with a repossessed car came into the Castleton branch of Peter Francis Geraci Law and met with bankruptcy attorney John Sadler. The vehicle was repossessed after the client was on medical leave from work. Indianapolis Geraci attorney Sadler filed the Chapter 13 bankruptcy petition the next day. A Chapter 13 provided bankruptcy protection and stopped the auction of the repossessed vehicle.

 

The couple picked up the car the day the case was filed.  Without the help of bankruptcy attorney Sadler and other Peter Francis Geraci staff, the couple would have needed to walk home.

The state of Wisconsin has a law allowing debtors to combine debt into one payment. Chapter 128 is specific to the state of Wisconsin. A Chapter 128 does not discharge debt – meaning you are not eliminating what you owe. 

 

Chapter 128s can stop a garnishment but you will need to repay your debt. You are not qualified under federal protection like bankruptcy. A repayment plan can only be 36 months and if you are married both spouses must file.  You cannot include any debts with collateral meaning a Chapter 128 will not stop car repossession, a foreclosure, and most recently a utility shut off.

 

Recently, a Wisconsin Court held that We Energies could disregard a Chapter 128 filing. We Energies does not have to stop a disconnection or reconnect services with a filing. The only way to stop a shut off is with a bankruptcy!

 

If you have a shut off notice, call Peter Francis Geraci, Geraci Law. A Chapter 13 bankruptcy filing will prevent the shut off. You can put the debt and other bills into an interest free repayment.

A Peter Francis Geraci Law client wanted to file a Chapter 7 bankruptcy to eliminate his unsecured debt and attempt a loan modification. His modification failed and his mortgage company filed a foreclosure. A sheriff sale order was entered in case. The client met with Geraci Attorney Frank Hernandez and his case was converted to a Chapter 13.

 

Geraci Attorney Jill Luetkenhaus filed the client’s case and the sheriff sale was stopped. The client said Peter Franci Geraci and attorneys saved his life. Without the help of Geraci Attorneys, the client would have lost his house. Loan modifications are blinders, if you want to keep your house call Peter Francis Geraci. You can meet with experienced attorneys like Herandez and Luetkenhaus to get the best option to get out of debt.

Are foreclosure rates dropping?  Yes. What does that mean for you?  Nothing.  If you are behind, you are behind.

 

The Mortgage Bankers Association reports 6.3 million mortgages over 30 days past due.  If you are waiting for loan modification, keep dreaming.  Peter Francis Geraci of Geraci Law LLC says:  “Our clients are doing something about past due mortgages.  They are filing Chapter 13 repayment plans and working on their modification during the Chapter 13.  That lets you control your debt, and gives you added leverage with the mortgage company.  It is a little known secret that if you file Chapter 7 or 13, banks will work with you just as before, and your chances of success may be better.

 

The longer you wait to be proactive on your home, the further you get behind. In a Chapter 13, you are able to spread the back payments into a 3-5 year repayment plan. The farther you are behind, the higher the payment is going to be. Be ahead of the curve and call  Peter Francis Geraci Law in Illinois Indiana and Wisconsin for a Chapter 13 Debt Repayment Plan to stop foreclosure, and get your mortgage current, for as little as $274 to file in as little as one day.

 

There are daily headlines discussing ways to fix the economy.  Journalists spew out facts and figures making little sense to your average person.  When CNN reports unemployment rates are showing signs of improving and my friends and family are still out of work – the CNN Special Report is meaningless.                

 

Nowadays, people are not concerned about the national economy. The concern is their household economy.  Most people are out of work, worried about layoffs, or struggling with inflation and frozen salaries. These people have children, credit cards and houses that seemed like a great idea in 2007.  As an average Joe, the future seems bleak.

 

Almost every person carrying monthly credit card balances should file a bankruptcy.  If you are working, get some relief with a Chapter 13 interest-free repayment. If you are out-of-work consider filing a Chapter 7 so you can save the monthly payment.  Many people are worried about the stigma of having a bankruptcy. Realistically, talk to your neighbors, family or co-workers. It is safe to assume someone is struggling with the same problems you are.

 

Think about it, the United States had a credit downgrade. Where is your relief? Your bailout? The answer is with a bankruptcy. Bankruptcy is a safe-guard for consumers.  It is the only way (unless you are able to make the payment) to stop creditor harassment and interest. Money you are paying your creditors every month does not decrease your balance. Instead, you are paying your creditors baseless interest.

 

Some creditors and advertisements will sell you the idea of debt settlement.  Have you ever tried to call your creditor to settle a bill? Most of the time, you’ll hear a dial tone. Many debt settlement agencies are usually owned by or in partnership with creditors.  You are paying an organization to settle the debt owned by the same company you owe!

 

Bankruptcy will get you out of debt. That way, when hours start to pick up at work, when the housing market begins to take a turn (for the better), you will be debt free! Stop the struggle and seek some relief.

Bankruptcy may seem simple but you are putting yourself and your assets at risk if you do not hire a competent attorney.  More and more people are being scared off by attorney fees.  While fees are important to consider, filing a case without an attorney is a mistake.  Bankruptcy Code is a 500+ page complex document, and if one line of text is misinterpreted, it can lead to the dismissal of your case, or the loss of your property. 

 

If a case is dismissed and refilled, the automatic stay (the document making the creditors stop calling) will remain in effect for only thirty days. You need to refile all the paperwork and file a motion to extend the automatic stay. Paperwork that takes hours for you to do, would take a competent attorney minutes.

 

Cost is always a factor. But consider paying an attorney and saving in the long term. Geraci Law offers payment plans for fees and has done cases for people of different financial situations. You pay a significantly smaller fee than your total debt.

 

Consider this example (you can read the full case online, here). He filed a pro-se bankruptcy. Because of an adversary loss, a $3,723,095.50 debt was found to be nondichargeable. While some cases are less complicated than others, some cases cost much more than the initial fee.

 

Hiring the right attorney is just as important. Peter Francis Geraci, Geraci Law attorney Jonathan Parker won an adversary proceeding for his client. An adversary was filed claiming the client committed fraud and the debt was non-dischargeable. Attorney Parker successfully argued her case and she saved thousands of dollars.                                                                                    

 

Like many Americans, a man simply owed money. One morning, the man left his family to try and settle the debts. That evening, his family was widowed and fatherless.

 

This man’s name was Irzen Octa and lived in Indonesia. He like many people was in debt and was worried about losing his home. His debt included an $11,000 bill to Citibank – almost double the original charge amount because of high interest.  He had bill collectors calling and other sleeping on his front step after Octa was unable to pay.

 

His wife is now suing Citibank for $350 million in damages. There is video of Octa entering a room in Citibank offices and leaving two hours later in a wheelchair.  Citibank in Indonesia contracted with outside debt collectors. Currently, they are examining who the collectors were and the job they were hired for.

 

The men Octa interviewed with were arrested (none were Citibank employees) for alleged group violence and mistreatment resulting in death.

 

How far is too far? Debt collectors in America have been criticized for violating FTC regulations but nothing resulting in death. America thankfully has bankruptcy law to protect you when the collectors are getting too harsh. You have a safety net to either eliminate your obligation to pay or pay your debt interest free with a Chapter 13 bankruptcy.

 

If you are struggling and have debt collectors threatening to sleep on your porch, call us! Bankruptcy will help you. To read the article in The Washington Post, please click here.

A client came into meet with Indiana Geraci Law Attorney Bridget Tucker to discuss his future tax returns. A friend of his had filed with a different attorney and was required to give his tax return to the Bankruptcy Trustee each year. The client was nervous about his own tax refund.

 

Bridget told the client his case was reported as no asset – meaning his tax return is his to keep!  When the client originally came into the office, Geraci Law attorney Robert Brynjelsen told him to change his exemptions. By changing his exemptions, he gets more money from his paycheck and can keep his return.

 

His friend will pay more than the original fee from the other attorney and will lose his tax return. By meeting and filing with Peter Francis Geraci/Geraci Law LLC, the client was able to actually save money.

Taking the first step and calling a bankruptcy attorney is the worst part of bankruptcy. Most people feel uncomfortable talking about finances with family let alone a complete stranger on the telephone. The phone counselors at Geraci Law LLC are knowledgeable and understanding to your specific situation.

 

Phone counselor, Kelly McNamara spoke to a couple about their assets and debt. The couple hesitated to file a bankruptcy because they worried about losing their home. Kelly found a Chapter 13 solution would suit their individual case to get current on the mortgage, protect all of their assets, and provided an affordable repayment plan on the other debt. By calling Kelly at Geraci Law, the couple found a great long term solution to their debt.

 

James McGlamery spoke with a divorced man who struggled with his budget after he started paying child support. Because of the change in income, he used his credit cards to pay for groceries.  The man was nervous about filing a bankruptcy on his credit card debt. James assured him he was doing the right thing and being a good dad.

 

Declaring bankruptcy can be intimidating. You are in a vulnerable position and it is important to trust the person you are discussing your financial troubles with. Geraci attorneys and staff are here to help. We will listen and find a way to get you out of debt!

The current economy affects different economic and cultural groups differently.  Older minorities are taking the brunt of the current economic downturn.

 

A study done by The Greenlining Institute found a huge disparity between minorities and white retirees. The study showed 91% of African American and Latino seniors are “financially vulnerable.” High health care and living costs are some of the factors in the disproportion. 

 

Social Security recipients have not received a cost of living raise in two years. With the cost of food and utilities increasing steady, many retirees must use credit cards to pay for the basic costs of living.  Often, the credit card payments become overwhelming.

 

An increase in a minimum payment can have a ripple effect on a senior’s budget. To stay current with the payments, the increased amount must be taken from a different part of a fixed income. There are many retirees who use money from their medical budget to stay current with credit card payments.

 

A chapter 7 bankruptcy is a great solution. The way to change your life from financially vulnerable to the stable is by eliminating the debt. Money spent on minimum payments can be used for food, utilities and other living expenses.  The retirement plan of pension, social security and credit no longer works. Eliminate the debt, establish a savings account and start to enjoy retirement.

Average household credit card balances have increased for the first time since 2008.  Analysts attribute the increase to incentives offered by banks like lower interest rates and cash back bonuses.

 

Apparently lesson not learned. Credit card companies want you to be in debt! If you sweated out the recession paying down your debt, why would you put yourself in the same situation? Your creditors may offer lower interest but ultimately if you miss a payment, the great deal goes away.

 

Most bank offer incentives for debit cards! Using a debit card forces you to live within your means. Some debit card reward programs offer cash back incentives. You also get cash back because you are paying zero interest.

 

Chapter 5 of Peter Francis Geraci’s bankruptcy book is titled, “When You Should Consider Chapter 7 or Chapter 13 Plans.”  If five or more of the following apply to you, it’s time to call the bankruptcy attorney:

 

_____My debt is over $5000 not including a car or house.

_____My payments are over 25% of my take home pay.

_____I am frequently late on my payments.

_____I pay 20% interest on my debt.

_____I buy necessary items like food or clothing on credit.

_____I frequently get cash advances.

_____I am thinking about getting a loan to pay other loans.

_____Someone has filed a lawsuit against me.

_____Collection agencies are calling me.

_____I am "robbing Peter to pay Paul."

_____My balances are not going down even though I make payments.

_____I have been turned down for more credit.

_____Payments are more than 1 month behind on more than one bill.

_____My driver’s license is suspended because of an accident.

_____I can't afford car insurance.

_____My mortgage or rent is always late, or is behind.

_____We are getting divorced and have too many bills to pay.

_____I have medical bills over $5000 that are not insured.

_____There is a garnishment or wage assignment on my check.

_____I owe income taxes I can't pay now.

_____My car is worth much less than I owe.

_____I have no savings.

A Chicago debt settlement firm was recently fined $314,000 for unlicensed debt settlement practices.  The company charged for “legal” services for negotiating down credit card debt in exchange for payment. Payment was required up-front before the alleged attorney would negotiate down debt.

 

According to the Chicago Tribune, fees included a $500 retainer, a $49 per month charge and up to 15% of the total debt.  If you have $10,000 in credit card debt, you would pay the firm $2,000 in fees plus a monthly charge!  Unlike a Chapter 13 plan, there is no limit to how many months your plan could last. A Chapter 13 bankruptcy is 3-5 years while debt settlement plans can last for ten years (that’s 120 months multiplied by $49).

 

Last year, Illinois passed the Debt Settlement Consumer Protection Act. This act prohibited debt-settlement companies from charging up-front fees. The exception to this rule is attorneys. So this firm advertised that debt would be settled by attorneys.

 

It was found however the agreements were signed by a man who was not licensed to practice law in Illinois. This same company is amidst a lawsuit with Illinois Attorney General Lisa Madigan – see previous entry “Another One Bites the Dust.”

 

To read the article please click here.

When you have made the decision to leave your home and you are unable to sell, you will receive countless letters from realtors. After the market tanked, so did the income for realtors who were making six-figure salaries. Realtors are looking for properties to sell to earn a living.  They will try to sell you on the benefits of short sales when really none exist.

 

Staying in your home until the end of the foreclosure will allow you to save money on the cost of rent. If you stay in your home, there is no commission available for a realtor!  A realtor will try to sell you on short sales because of the possible commission. They may try to say a short sale looks better on your credit than foreclosure. Reality is a short sale looks just as bad.

 

Do not believe the hard-sell by realtors. Think back to when you purchased your home and a realtor tried to justify an upgrade here or there. Look at your finances, if you are out of work take advantage of the situation. You can save money on rent until the end of the foreclosure.

Deed-in-Lieu of Foreclosure

 

A deed-in-lieu is an agreement between you and your mortgage company to transfer the deed in exchange for release of mortgage obligations.  Your mortgage company will not receive any proceeds because the home is not being sold.  Instead the deed to the property is being transferred back to them. Your mortgage company will NOT offer a deed in lieu-of-foreclosure if they think you can make your payment. Before consideration, you will be asked to provide bank statement, paystubs, and years of tax forms.

 

Foreclosure

 

If you cannot afford your home, if you do not expect to return to work in the next twelve months, and if you do not want to keep your home – stop paying your mortgage. You will lose your home eventually but you will lose your home anyway with the previous options.  A foreclosure can up to 20 months. You can save money on rent and stay in your home, rent-free! The money you will pay in association dues and insurance will probably be significantly less then rent.

 

If you want to save your home, look at a Chapter 13 bankruptcy. A Chapter 13 will stop the foreclosure process and allow you to repay the arrears in a 3-5 year repayment plan. If you are underwater on your first mortgage and have a home equity loan, you can possibly strip the second in a Chapter 13!

There is a moment when you realize you cannot afford your home anymore. It may happen when you lose your job or hours are cut. Or when you check your savings account and there is nothing left over. When you come to the realization, it is important to understand your options.  So begins the what to do with my house guide…

 

Loan Modification

 

The original purpose of loan modifications was to help an estimated 3 to 4 million homeowners save their homes.  According to a report done by the Office of the Special Inspector General for the Trouble Asset Relief Program (SIGTARP), only 168,708 permanent loan modifications have been approved.  This is a year after the program!

 

Loan modifications can take months. If you have lost your job and your only income is unemployment, a loan modification will not work. You can call your mortgage company about working with you while you’re unemployed. But understand, unemployment does not count as income. Unemployment can run out (in approximately 2 years) or change. It is not a long term solution for your or your mortgage financer.

 

Bankruptcy will not modify your loan.  But if you have other debt, you can file a Chapter 7 to eliminate the other bills and free up money to pay your mortgage. If your mortgage payment is $850 and you pay $600 per month in minimums – a solution is discharge credit card debt and use $600 to pay your mortgage!  Eliminating the debt-income ratio issue could also help you with a loan modification application in the future.

 

There is no harm in applying for a loan modification. You could be one of the few who is accepted. It is crucial to understand loan modifications are NOT guaranteed. It is up to your mortgage company to modify your loan. A bankruptcy discharge is!

 

Short Sale

 

A short sale is an agreement with your mortgage company to sell your home at less than what is owed.  Short sales like loan modifications are long, tedious and strenuous processes. More often than not, the short sale falls through and you still go into foreclosure.  

 

It is not as simple as the ads and the flyers you receive from realtors.  Understand you are asking the bank to take a loss on their investment. Before the bank agrees, you will need to provide bank statements, tax returns and other financial documents. Your financer wants to make sure you have no other means to pay your mortgage.

 

A short sale can still destroy your credit report. A deficiency meaning the difference of what you owe and how much the home is sold for. If the deficiency is reported to the credit bureau, it would show as a settled debt.  This is still negative! Not to mention, you could receive a 1099-C during tax season. You would pay tax on the deficiency.

 

If your credit is going to plummet anyway, why leave your home early? An average foreclosure takes 20 months – why not stay RENT FREE at your home? Let the property go through foreclosure, if there is a deficiency call Geraci for a bankruptcy. Mortgage deficiencies are dischargeable debt!

I spoke to a woman today who hated credit card companies almost more than I do. She made payments on time every month for the last 30 years. Every month her letters were addressed as a valued customer and she took pride in the title.

 

Because of some bad luck, she lost her job and now is on unemployment.  She called the credit card company to ask for help. The lovely woman on the phone closed her account, reduced her credit line and demanded payment.

 

Thirty years of timely payments and when she called the only helped offered is an inevitable hit to her credit report. If the amount of debt she had on the card was close to the limit, she will now be charged high penalties because of the lower credit limit.

 

When you have debt, listening to financial advisors like Suze Orman does not get you out of debt. Talking to your creditors is not easy when you owe thousands and have reduced income. The Geraci Chapter 7 solution will eliminate all of her debt so she can start rebuilding.

 

Understanding that your creditors do not care about you is the first step to rebuilding. Your creditors want payment and if you are unable to do so, the valued customer title will change drastically.

My grandmother reads the financial section of the paper for anything related to debt and bankruptcy. Apparently after weeks of research, she came to the conclusion that articles about foreclosure do not mention bankruptcy.  I saw her recently and was given a stack of news articles related to foreclosure help and she was right. Not one journalist thought to contact a bankruptcy attorney as a source.

 

Most of the articles are wishy-washy and talk about contacting your mortgage company to ask for a loan modification. A particular favorite was the Chicago Tribune’s “Taking the Fear out of Foreclosure.” The author tells homeowners not to worry and there is help available. I do not think the author is behind on their mortgage because homeowners should worry!

 

Once a foreclosure judgment is entered, crossing your fingers will not save your home. It’s time to be proactive and look at ways to actually protect yourself and your property.

 

In the “Taking the Fear” article, the author writes, “Even years into the housing crisis, they still don’t have the manpower with the training and experience to handle the onslaught. So be patient – and keep trying and trying to reach your lender.”

 

This would be wonderful advice if there was no such thing as foreclosure. The more patient you are and the more you try to reach your lender, the more you get behind on your mortgage payment.

 

Another popular tip from the news media is to apply for a loan modification.  If you know anyone who has applied for a modification, then you understand it is not the seamless process portrayed by the media.

 

Loan modifications are rarely successful. Mortgage companies want current documents and will routinely deny modification applications if the most recent paystub is not sent in.  On average, a definitive answer will take at least eight months. Its eight months to get caught up on if you are denied for a modification.

 

More often than not, the people I speak to can afford their regular monthly mortgage payment. It is the thousands of dollars in late fees and penalties that they struggle to get current on. These people should be reading articles in the Trib about the wonder of a Chapter 13 bankruptcy.

 

A Chapter 13 will STOP the foreclosure. I do not want to provide the vague, useless information that most of these articles provide. If you are in foreclosure and you can actually afford your mortgage, then file a Chapter 13.

 

A filed case with an experienced law firm like Geraci Law will prevent the same ol’ song and dance of deferred payments and forbearance agreements.  If you were denied for a modification and receive the disheartening alternatives to foreclosure packet, do not feel defeated. A Chapter 13 will save your home.

A report done by the Federal Reserve said consumer debt rises for the eighth straight month.  Credit cards are the reason for the spike.  According to analysts, more consumers are using credit cards to pay for necessities.

 

The problem is when the bill comes in; the user pays only the minimum payment. If you spend $400 on groceries and only pay the $20 minimum payment, you are living beyond your means. Your debt will quickly spiral out of control and with high interest rates; the $400 balance can turn into $600, then $800, etc.

 

The CARD Act passed in 2009 requires creditors to explain minimum payments.  If you look at your statement, you should see two figures. The first shows how long it will take you to pay off your debt making only the minimum payments. Another amount should show how much you will pay in interest over three years of minimum payments.

 

Credit is NOT an extension of your income.  You can quickly get into the cycle of using your income to make minimum payments and using your credit because your income is gone. Staying current with your minimum payments while charging necessities each month does not get you anywhere.

 

Your solution is to file a bankruptcy! A bankruptcy eliminates all of your credit card debt.  You cannot use the plastic while in a bankruptcy and are forced to live within your means. Take a minute and think how much you spend on minimums. My guess is the money is more than enough to fill up your gas tank – even at $4.00 per gallon.

Bankruptcy is as American as apple pie and fireworks on the 4^th of July.  Bankruptcy is one of our country’s oldest laws and has helped citizen and patriots find debt relief. Many great political figures in American history filed a bankruptcy.  This proves debt and bad luck can happen to the greatest of Americans.  Happy 4^th of July!

 

Abraham Lincoln

 

When Lincoln was in his early twenties, he and a friend decided to open a general store. Neither believed the store would close and purchased all supplies on credit.  The store eventually closed and Lincoln’s partner died leaving him with a large bill.  He filed a bankruptcy and became one of our country’s greatest presidents.

 

Thomas Jefferson

When President Jefferson left the White House, he left with close to $20,000 in debt (this number is not adjusted with inflation). Jefferson has been considered to be one of the most influential thinkers of his time and he filed multiple times.  He understood the importance of bankruptcy law in protecting debtors.  In 1809 at a debate regarding amending the Bank Bill, Jefferson said,

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks], will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Ulysses S. Grant

After leaving office, President Ulysses S. Grant filed a bankruptcy after a trip around the world. The trip depleted his life savings and to earn it back, he invested in a fraudulent bank. Grant ultimately was required to pay back a large loan using Civil War memorabilia.

Mark Twain  

Before becoming an acclaimed author, Mark Twain tried to open his own publishing house.  He invested his money into a typesetting machine and was relying on the return from the invention.  Reality hit and the typesetting machine was never completed and Twain ultimately filed a bankruptcy.  After the bankruptcy, Twain was determined to stay out of debt and began writing novels to pay the bills.

 

Baseball is America’s past time.  Teams like all Americans are struggling during the economic downturn.  Players by contract are making millions, but revenue has dropped and has forced many teams into bankruptcy.

 

Most recently, the Los Angeles Dodgers filed for bankruptcy protection.  The reason cited is a significant drop in attendance and mismanagement by owner Frank McCourt. Unsecured creditors include players and the Chicago White Sox (both teams share a spring training facility).  The filing comes after attempts at refinancing a loan against the stadium’s parking lot and applications for additional loans.

 

Ultimately McCourt and the Dodgers were out of options.  McCourt rejected a multi-billion TV deal last week and is hoping a federal judge will approve $150 million in financing for a better media contract. Whether or not a media contract will improve the standings for the Dodgers is hard to predict.  The Dodgers are currently 9 games back and playoff potential looks grim.

 

Last year, the Texas Rangers filed for Chapter 11 protection.  Hall of Fame pitcher Nolan Ryan purchased the team at auction.  After bankruptcy filing, the Rangers reached the World Series for the first time.  Hockey franchise Pittsburgh Penguins filed for bankruptcy protection twice and have gone on to win 3 Stanley Cups.

 

Now a bankruptcy filing will not guarantee you a championship. The Chicago Cubs filed for protection in 2009 and the curse was not discharged.  But whether you own a professional sports franchise or if you are a common lay person, post-bankruptcy is about rebuilding. The Texas Rangers created a plan and stuck to it. You cannot expect as an individual to maintain the same lifestyle post-bankruptcy.

 

You make payments on time; you save money and who knows you could be drinking champagne from the Stanley Cup?

A recent blog entry from Stephen J. Dunn for Forbes entitled, “Consumer Bankruptcies Do More Harm than Good” sparked controversy from bankruptcy attorneys and people in debt. I wanted to address the problems with Mr. Dunn’s narrow-minded entry.

 

“Most consumer bankruptcies are pointless”

 

Dunn’s argument is creditors rarely sue or call people who owe.  He cites the Fair Debt Collection Practices Act stating, “[A] creditor must, at the request of a consumer, stop contacting the consumer about a debt.” Clearly Mr. Dunn has never spoken to someone in debt. Creditors frequently contact debtors from dawn until dusk. When the debtor fails to reply, the creditor will sue the person. 

 

If it was as easy as asking a creditor to stop calling, why would anyone pay bills? If lawsuits happen rarely, then why not charge up debt? It’s shortsighted to believe it is that easy. In this economy, loss of income makes it increasingly difficult to stay current with payments.  Single moms with kids struggle to put food on the table and instead of providing them with debt relief (through bankruptcy), Mr. Dunne would rather these people do what?

 

There is an entire study dedicated to the stress caused by debt. Dr. Paul Lavrakas of Ohio State University found debt can cause stress leading to severe anxiety, ulcers, digestive tract problems and eventually heard problems.

 

If creditors “rarely sued” debtors, garnishments would not be an issue. The county circuit courts would be empty of creditors’ attorneys.  Mr. Dunn is so misinformed it’s frightening.

 

“The debtor is subject to criminal prosecution for willfully false statements made therin”

 

Yes, Mr. Dunn if someone commits fraud (outside of bankruptcy also) they will be subject to criminal prosecution. 

 

“A creditor can challenge the dischargeableability of a debt.”

 

Creditors have rights just like consumers. This shows the importance of hiring a skilled bankruptcy attorney.  Peter Francis Geraci, Geraci Law attorneys are able to win adversary proceedings on behalf of clients. Bankruptcy is not a simple process but neither is ignoring ringing phones and lawsuit summons.

 

I, like Mr. Dunne, am not an attorney. I cannot provide legal advice. But, I am fortunate enough to understand that millions of Americans with debt have found relief with a bankruptcy discharge.  I also understand not to believe everything you read on Wikipedia – my corrections to the author:

 

-A chapter 13 plan can go for three – five years, NOT three-four.

-Chapter 7 and Chapter 13 are BOTH consumer bankruptcies.

 

To read the atrocity, please click here.

After a bankruptcy petition is filed, a person is required to attend a 341 Meeting of Creditors.  The 341 is scheduled a couple of weeks after a case filing and can take up to 3 hours.  Your attorney will be there to help you through the process.

 

If you are working, scheduling time off of work can be difficult.  A client had taken time off of work to come to the 341 Meeting. However, the client had the date wrong and would have to take additional time off of work.

 

The client’s Geraci attorney, Jason Shimotake, spoke to the trustee and the client’s case was heard the same day. Instead of a wasted trip and wasted vacation time, attorney Shimotake was able to help the client.

 

Another client’s 341 Meeting was misdocketed. If the client had missed the 341 Meeting, the case would have been dismissed.  Attorney Sharon Hunt came to the client’s rescue and contacted him to explain the situation. The client was able to come to court and keep his case open. Attorney Hunt represented her client and now he will receive his discharge.

 

Attorneys Hunt and Shimotake, like all Geraci attorneys, took the extra minute and solved the problem. Small things by Geraci attorneys mean big rewards for Geraci clients. Shimotake’s client was able to save a vacation day and Hunt’s client was able to save his case.

A recent study down by www.bankrate.com found only 24% of Americans has a six-month emergency savings account and 24% have no savings at all.  With the unemployment rate starting to increase again, saving becomes more and more important.

 

If you or your significant other were to lose your job, think about how you would stay current with the mortgage payment or rent? How would you put food on the table? If you have other debt like credit cards, are you willing to fall behind on a car payment to stay current with your Visa bill?

 

These are questions you should ask yourself if you do not have savings.  With over $10,000 in debt, minimum payments are wasted.  Your payment goes primarily to interest and you are paying the creditors to call you if you are late.

 

Filing a bankruptcy will eliminate your debt so you are able to save.  Instead of wasting good money on minimum payments every month, you can put the money into an interest-bearing savings account.  So, if you were to lose your job, you would have a comfortable savings account to rely on until you found other employment.

 

In these shaky, economic times saving becomes more and more important.  Look at your own financial situation and see if you are able to survive six months without income.  You never know what is going to happen with your income or health and should be prepared for a financial emergency.  If you are making minimum payments and still have a large debt balance, call Peter Francis Geraci, Geraci Law for your bankruptcy options.

 

To read the report by www.bankrate.com, please click here.

An Indiana woman came to Castleton office and met with Attorney Lacey Stier. The client wanted to file a Chapter 7 to eliminate debt.  The client had fallen behind on her minimum payments and was beginning to struggle with her mortgage. Before her appointment, the woman believed she was coming into a Geraci office to start a Chapter 7 bankruptcy filing.

           

After speaking with attorney Stier, the client decided to file a Chapter 13 bankruptcy.  By reviewing her options with a Geraci attorney, the client will be able to keep her home, her vehicle, and pay an affordable monthly payment on other debt.

 

The client was also advised by Stier - pending an appraisal - will be able to strip her second mortgage and lower the interest on her vehicle by 12 percent! After meeting with a Geraci attorney the client has a better plan for getting out of debt.

 

Without meeting with an experienced Geraci attorney, she would have never known her options.  If you would like a mini-consultation or to schedule an appointment with an experienced attorney for your options, please give Peter Francis Geraci, Geraci Law a call.

 

According to a report by www.cardhub.com, consumers are paying less down on credit card debt. The report shows in 2011, consumers paid down $32.4 billion in credit card.  This number is down 26% from last year.

 

However, the report projects consumers will end the year with $20 billion more in debt. Paying down debt will not provide debt relief if you return to using the credit cards. By not saving the tax refund or work bonus, it is inevitable to return to paying for groceries with credit cards.  Creditors keep you in debt this way – you pay on the debt and as result of the payment, continue to use the credit card.

 

Your solution is a bankruptcy.  While in a bankruptcy you cannot use your credit cards and will learn how to live within your means.  Discharging debt through bankruptcy is guaranteed relief.  You have no debt and your extra income goes to a savings account.

 

Creating a budget and saving money is way to prevent taking on more debt.  Relying on the next tax refund or bonus is not a guarantee to get out of debt. Bankruptcy is! Paying down debt every year is fruitless if you end with more then you started with.

 

This year when you get a bonus, call Geraci Law and inquire about bankruptcy. At your first meeting you can cut up the credit cards and put them in our fishbowl. You eliminate all of the debt and can take advantage of the required credit counseling and debtor education courses.  These courses will teach you the importance of budgeting and how to create a budget. After your bankruptcy is over, do not resort to the credit cards – instead use the opportunity to live debt free!

Geraci Law Peter Francis Geraci files almost a thousand bankruptcy petitions each month in Illinois, Indiana, and Wisconsin.  Unlike lawyers who take an occasional case, we’re almost every bankruptcy court every day. You pay the same approved attorney fee for every Chapter 13 whether it’s Geraci Law or a solo with one case per month.

 

Our attorneys do not need to ask for continuances because of schedule conflicts nor miss a court date because of distance. If you go to an inexperienced attorney who only has one case a week, it’s a big deal for them to answer a motion on your case.  For Geraci Law, it’s no big deal; we do it every day every week all the time and we’re always in court.  

 

For instance, this week in Kenosha/Racine Wisconsin 20 of the 54 Chapter 13’s are Geraci Law clients.  Geraci Law attorneys are always in court. You, as a client, are able to go to our local office near you, but still know another Geraci Law attorney is meeting your needs in court. 

  

Geraci Law Peter Francis Geraci attorneys are experienced and eager to help a client out.  

 

In Indianapolis, attorney Lacey Stier got a hug!  She writes: “Had some time after client’s 341 meeting so sat with her in hall for a while and let her “vent.”  Elderly woman whose son was in major surgery at that very moment in Florida. He’s her only son out of 7 kids and her “angel” and she was very nervous and worried. Wants to go down to visit him and was so happy when I told her this was all behind her and she was free to go take care of him that she hugged and kissed me.”

 

In Milwaukee, attorney Kathyrn McKenzie protected a house from creditors while another firm’s client lost his:  she writes “Client was early for 341 and witnessed one hearing where trustee might be taking a pif (paid in full) house because the guy had transferred it to his business less than a year ago with no compensation.  Client was worried that trustee would go after his house as well.  Assured client that his house is safe.  Client was relieved that we were able to protect his house.”

 

In Waukegan, attorney Jason Shimotake persuaded the UST to hear a case when an elderly Geraci Law client showed up confused on the wrong day, saving her trip to court.

 

Going above and beyond is our mission. Bankruptcy is a complicated process and knowing your attorney is there to help you through it is why you file with Geraci Law Peter Francis Geraci.

With rising living expenses and decreasing income, more and more students are relying on financial aid to pay for school.  Families in debt and contemplating bankruptcy will always ask, “How will bankruptcy affect my ability to take out student loans?”  The easy answer is it shouldn’t – but like everything involving bankruptcy it’s never that easy. 

 

Generally speaking, a bankruptcy should have no affect on the eligibility for a federal loan.  Federal loans include Unsubsidized Federal Stafford Loan, Federal Pell Grants, Federal Perkins Loans, Federal Supplement Education Opportunity Grant, Federal PLUS Loans.  These loans cannot be denied to a student based solely on a bankruptcy filing.  Administrators cannot cite bankruptcy as a reason for denial but schools can use past payment history in determining willingness to repay the loan.

 

If you are a parent and apply for a PLUS loan – a bankruptcy could affect your ability to take out a PLUS loan.  The reason for denial could be an adverse credit history (and the debts you discharged through bankruptcy) within the last five years.  A parent could be eligible with a co-signer and a child could still be eligible for an increased unsubsidized loan.         

                                                                                                                                                  

Private student loans are different and more costly. Most private student loan programs examine credit history within the last ten years and a bankruptcy discharge can disqualify someone from a private student loan. These loans do not have a fixed interest rate on repayment like federal loans. The interest paid on private student loans is based on credit score and if your score is below 650 you will probably not be approved.

 

Increasing your credit score 30-50 points can improve your application and subsequent interest rate on private student loans. If someone has unsecured debt and a poor payment history, filing a bankruptcy and then reestablishing credit post-bankruptcy could improve ability to take on student loan debt.

 

So after bankruptcy, make payments on time to reestablish your credit.  Bankruptcy is not the reason for denial – your payment history is.  This is the same with future purchases like a home loan or a car loan. Loan servicers (including home and car financers) want to see a willingness to pay back debt.  Like any major loan, your creditors want to see you are worth the risk.  This is why payment history is the biggest contributor to your credit score and your student loan eligibility. 

 

Use your bankruptcy as a reset button.  Budgeting and saving money will help your future financial decisions.  Your bankruptcy filing is not an excuse for poor credit. It is an aid to helping you reestablish and rebuild.

Presidential hopeful, Mitt Romney, said bankruptcy saved Detroit – not the bailouts given by the Bush and Obama administrations. Chrysler and General Motors both filed Chapter 11 protection and now are showing a profit and adding jobs. Both companies took the bailout and ultimately filed bankruptcy.

On the CBS Early Show, Romney said, "[W]e could have saved billions of dollars had we moved to bankruptcy from the very beginning." General Motors received a bailout of $43 billion. Since the loan, GM has paid $6.7 billion back and the balance will be converted to stakes in the company. It will take years for taxpayers to receive the money back. GM was able to pay back the $6.7 billion through the bankruptcy filing.

When the recession started, thousands of autoworkers were offered early retirement or laid off entirely from jobs. Many workers were in the same position as their previous employer – without demand for employment and an overwhelming amount of debt.

Bankruptcy is not usually a debtor’s first choice for getting out of debt. Instead, many debtors will ask family or friends for loans before calling a bankruptcy attorney. These loans often do more harm then good.

Family members or friends will want repayment on the loan and if you are out of work you may not be able to pay it back. Or because of the economy, your peers may have financial troubles and could not loan you the amount to pay back all of your debt. If you are the person lending the money – are you going to be ok with not receiving repayment?

If you receive a loan for $10,000 and you have $30,000 in debt – at best you will have $30,000 in debt because you still have to pay the loan back. If you file for bankruptcy, you eliminate the need for the $10,000 loan and the $30,000 in debt and keep you relationship with the family member or friend you were going to borrow from.

Bankruptcy helped the previous auto giants and helped provided jobs back to the autoworkers of Detroit. If you have debt, do not borrow more money to pay back debt. Take Romney’s advice – look into a bankruptcy and save billions of dollars. You can see the Romney interview here.

 

The epic Recession of 2009 when joblessness increased and the housing market started to tumble is getting a sister in the follow-up Recession of 2011. Apparently lenders and borrowers have not learned from their first mistake with the new fad for poor credit is car loans.  Lenders like Ally Financial will finance borrowers with a credit score of 660 or less and the number of applicants is increasing significantly causing other lenders to enter the market. According to the Experian’s Auto Count Risk Report, the number of subprime customers increased from 5.6% to 6.96% of loans and deep sub-prime customers increased from 1.44% to 1.74%.

 

Subprime auto loans – like subprime mortgages – will have an extremely high interest rate.  Interest rates can range anywhere from 10-25%.  The biggest issue with auto loans is depreciation. Before the market crashed, homeowners were able to take on a subprime mortgage payment and since the market was a seller’s market, the property could appreciate in value.  A car will lose value the second you drive the vehicle off the lot. When you have a subprime loan, the payments for the first two years will go directly to interest and you are immediately under water on your car loan.

 

A common question is what a bankruptcy will do to my auto loan.  In a Chapter 7 bankruptcy, it is possible to negotiate better terms on reaffirmation agreements but there is no guarantee. Lenders also have little incentive to do so since a market exists for repossessed and used vehicles (actually the used car market is booming). In a Chapter 13, you must follow the 910 day rule meaning you can only use the Bankruptcy court to reduce interest on your vehicle loan if you purchased the vehicle over 910 days ago (or 2.5 years ago).  Otherwise, your 10.5% interest on a 1998 Ford Ranger will stay intact.

 

There is a solution. You file for bankruptcy to eliminate your unsecured debt and surrender your vehicle. I understand the sentimental value but be realistic. If you are paying more on your car note then in rent, you need to either move into your vehicle or let it go. After the bankruptcy is done – save money! Put your previous car payment into a savings account so you can purchase another vehicle with a bigger down payment and better interest.

 

Instead of a 1990 vehicle, you can purchase a brand new car and if after your bankruptcy you rebuild your credit you could qualify for 0% interest for five years! Read the contracts before you purchase, do your research and be ready to make a big down payment and soon enough you’ll be cruisin’ in a great car.

Even with the alleged job growth and relatively low mortgage interest rates, home values in the Chicagoland area continue a scary downward spiral. Equity many homeowners relied on for retirement is gone and in some cases, homes went from having $100,000 in equity to being underwater.  Read the Chicago Tribune article here.

 

When homes were selling, many homeowners were able to pay on the first loan to gain equity in their property.  With the job market being an applicant’s market, many people paid more on their mortgage to decrease the interest and pay off the loan much sooner.

 

To increase the potential value of the home, a homeowner would use the equity and take out a home equity loan or second mortgage for renovations to the property. Often the assumption was if a person redid a kitchen or put on an addition, the home would sell for a lot more money to pay off the first and the second loan and still walk away with a large check for the next property investment.

 

After the market crashed and home values dropped, a homeowner lost equity and found themselves with a big first mortgage, a now unsecured second mortgage and no potential buyers for the property. When the job market started to crash and many people found themselves with paycuts or reduced hours, trying to remain current with the first and second mortgage became difficult. If you have ever tried to ask for help from your mortgage company, then you understand your financer could care less about your problems.

 

Thankfully, you have options with a bankruptcy. If your home is underwater meaning you owe much more than the property is worth and have a second mortgage on the property, you can file a Chapter 13 to try and get the value back in your home. For example – if you have a first lien balance of $300,000 and a second lien balance of $75,000 and the value of your home has dropped to $275,000 – your second lien no longer has equity to support the loan.

 

The second lien becomes unsecured and you are able to “strip” the balance after the completion of a Chapter 13 bankruptcy. A Chapter 13 will allow you to pay back a percentage of your other unsecured debt like credit cards and medical bills and at the end of the repayment plan (and subsequent discharge) the balance of your second loan is eliminated. Think about it – your credit card/medical debt is paid off and the only debt remaining is your first mortgage. If that’s not a modification – I do not know what is!

 

If you are underwater on your mortgage (and really at this point who isn’t?), call Geraci Law, LLC and we can figure out what your best option is.  As homeowners, we cannot wait around forever for our mortgage companies to answer the phone or for the housing market to improve, it’s time to be proactive and get out of debt!

Earlier this week, Illinois lawmakers sent a bill for Governor Pat Quinn’s approval. The bill would allow new casinos to be built in Chicago and other undetermined Chicago suburbs. If approved, licensing fees could generate millions for a failing Illinois budget.

 

The most sought argument for the casinos is the additional revenue generated for the city. To generate revenue, a casino must create a foundation of “losers” to pay for upkeep.  So the city would make money from licensing fees, etc. but the money is generated from gamblers losing at the slot machines.  Gambling addicts would be taking on more debt to pay Illinois creditors.

 

One of the major causes of bankruptcy is gambling.  Gambling addictions can cause someone to take out payday loans, credit card advances, and keep them searching for the next big score. The problem is when the bill comes due and there was no big score for payment.  In a short time, a person could have thousands of dollars in debt with obscenely high interest. For example, a cash advance on a Discover credit could have a fee to take out the loan and a 25% interest on the repayment of the loan. 

 

Other addicts may try to take out a marker from a casino.  The casino will ask how you intend on paying for the marker and will take the risk to keep you gambling. A marker does not have to be paid by the time of leaving the casino.  Taking on another line of credit if you cannot pay for the debt can possibly make the debt nondischargeable in a bankruptcy.                                                                                                                        

 

Gambling addiction can cause loss of income. Seems like an obvious statement but when you are missing time from work you are not only losing at the casino but from your paycheck as well.  Missing time at work to go to the casino is common for addicts.  Instead of working to pay back debt, some addicts consider gambling to be their full-time job. Solving financial problems by gambling is one of Gamblers Anonymous 12 step program.

 

If Governor Quinn allows a casino overhaul, isn’t the state of Illinois using gambling as a way to solve financial problems? Gambling has no guarantee to get out of debt – bankruptcy does. Throw the dice, call a bankruptcy attorney and enjoy the big debt-free win!

An average American solider has more debt than the average civilian.  In honor of Memorial Day, I want to discuss (belatedly) the Service Members Civil Relief Act.  The law was put into place for soldiers to focus on defending the country and be free of financial distractions.  This law is made (especially for) military men and women who are indebted because of their service.  We want to protect our military from financial hardship and stress and using SCRA can help.  SCRA primarily will:

 

-Prevent filing of a default judgment

-Stop evictions (as long as rent is not more than $1200 per month)

-Reduce interest on debt (protected against credit with interest over 6%)

 

However, this is not a permanent solution for debt. Collections, judgments, and interest can resume after 90 days of a soldier’s discharge. So a soldier comes back from serving his/her country and after reclamation, the collection calls and lawsuits will resume.  We suspend the stress caused by debt – but after discharge, a soldier loses his/her SCRA protection.

 

The only debt protected by SCRA is debt incurred before active duty. To use SCRA for the benefits, a soldier must show service have a “material effect” on the cause of the judgment. SCRA also does not happen automatically. A soldier should send a copy of the mobilization orders to the creditors before being deployed. While SCRA helps soldiers, it can be considered a Band-Aid for a possible debt wound.

 

The long term solution is a bankruptcy. After the 90-day grace period, a veteran can find themselves with creditor calls and possible lawsuits. The way to stop the lawsuits and judgments is a filed bankruptcy. Eliminating all debt with a Chapter 7 or consolidating in a Chapter 13 repayment plan is the way to permanently relieve the stress of our veterans.  While in active duty, interest on debt (again incurred before duty) is reduced, but after the 90 days, interest will start again.

 

Bankruptcy is the best way to be debt free.  It doesn’t matter if you are a civilian or a soldier, bankruptcy law is there to protect you for the long run – not until you are discharged from active duty.

Rain, rain, go away. The rain in the Midwest never seems to stop. Like the bad weather, debt never seems to stop. Unless you win the lottery, your debt is not going anywhere, anytime soon. Debt hangs over your head like a black cloud ruining a sunny day. Minimum payments do not decrease a large balance and settling the debt could land you with a 1099 IRS form.

 

I have spoken to enough people to understand no one plans on being in debt. Something happens – whether a medical calamity, divorce, loss of job, etc. where someone is not able to move financially move forward.  Options like debt consolidation work the same as holding a newspaper over your head in a downpour. The newspaper eventually rips and you get soaked – or sued by a creditor.

 

Debt freedom does not happen overnight.  Your case can be filed in as little as one day – with Geraci Law, LLC – and for the next 60-90 days you and your attorneys are waiting out the creditor storm for your discharge from the bankruptcy court. If you have a big debt balance, filing a bankruptcy is like finding shelter from a thunderstorm. A Geraci attorney will help you get some relief and feel ease.  With the economy in shambles and gas prices increasing another $0.30, everyone needs some help.

 

Bankruptcy is a great solution if you are being followed by a financial storm cloud. The creditor calls and the constant headaches can make any situation seem like a rainy day. Discharging your debt could be the best thing you do – instead of worrying about how you are going to stay current with credit cards and put food on the table, you could worry about…nothing but finding the pesky lost umbrella.

 

 

There is an irony to unemployment and credit. If you receive unemployment and cannot afford your minimum payments – your credit suffers, but if your credit suffers you may have difficultly finding a job. More often than not, unemployment does not come close to paying normal monthly living expenses and often a credit score suffers. For example, the Transportation Security Administration (TSA) will not hire if someone owes over $5,000 in debt. So you receive unemployment and possibly may not find employment because your credit is taking hit after hit with every late payment.

 

According to a study done by the Society for Human Resource Management, over 60 percent of the private sector uses credit as a determiner for employment. That’s a big percentage to have credit checks only done for bankers and financers.  Employers are looking at two big things on your credit – the amount of debt you are in and your payment history (conveniently the two biggest contributors to your credit score calculation). Filing a bankruptcy will eliminate large amount of debt and poor payment history. If you make timely payments, you can actually rebuild!  

 

The Bankruptcy Code prohibits an employer from discriminating against someone who has filed for bankruptcy and an employer is supposed to tell you if credit information is used against you. So if you file a bankruptcy, an employer cannot use it against you but if you do not file a bankruptcy and have poor credit – you could miss out on a job.  Seemingly, bankruptcy is your better option.

 

The irrational logic behind bad credit affecting an employee’s ability to complete a job is based on the idea if you have bad credit; you will be distracted from completing your work. My thought is if someone has bad credit, they are thinking about finding work to help with their bad credit! The distraction of “bad credit” happens while they are out of work and trying to put food on the table.  Especially post-bankruptcy, a potential employee has zero debt to distract them while at work.

 

When your debt starts affecting your ability to find work (and actually pay off the debt), then it’s time to bite the bullet, open the mail and actually do something about it. After your debt is discharged through bankruptcy, make your payments and time and work to rebuild your credit. If a potential employer asks you about your bankruptcy, honesty is the best policy.  Explain to your interviewer you are debt free and have zero distractions to keep you from doing your job.

The housing bubble is going to burst – again. The big difference is the housing bubble is a foreclosure bubble. With the foreclosure rate slowing and the unemployment rate (in many states) rising, the burst is bound to happen soon.

 

Foreclosure rates could be slowing for numerous reasons. The biggest reason probably is the scrutiny of mortgage companies’ foreclosure process.  A person used to lose their home after being delinquent for 6-8 months. Now, it could take up to a year (s) for a homeowner to actually be evicted.  Mortgage companies are required to provide HAMP options and in some counties, mortgage counseling services before a foreclosure judgment can be entered. In some cases, a homeowner could be behind 9 months before being contacted by a foreclosure attorney.

 

The decrease in the amount of foreclosures filed does not mean there are fewer homes in trouble – it means there are more delays by banks to actually take homes. A loan modification application can delay a foreclosure for months (in some cases years). A mortgage company cannot foreclosure on a property without offering a HAMP modification opportunity and the backlog of applications and homeowners with arrears could delay even the most efficient of foreclosure attorneys.

 

This is seemingly good news for struggling homeowners who can stay in their homes until they return to work (and file a Chapter 13 to get caught up on the arrears) or find a new living space. But at some point, the foreclosure bubble will burst and many will find themselves with an expedited foreclosure and a pending sale date.  This happens often after a loan modification is denied. After months of faxing, e-mailing, and mailing the same documents to a mortgage company, a homeowner could find a summons for foreclosure on their front door.

 

It is easy to ignore the collection letters and the notices – even when the notice is being handed to you by a process server. Since foreclosure generally takes over a year, a person can gather a hefty amount of mail from mortgage companies and attorneys. I have heard people say, “My mortgage company told me if I want a modification I should not make my mortgage payment.” The answer is your mortgage company is suing you because you are going into foreclosure! A loan modification can be denied and the default amount, late fees, court costs, and interest can add up to a substantial amount. At this point, your mortgage company is probably done working with you. Often, your mortgage servicer will demand the entire amount to stop the foreclosure proceedings.

 

Checking and actually reading your mail is important – especially if you want to save the house. Once the foreclosure attorneys get their ducks in a row, the number of foreclosures will start to match the increasing number of people with defaulted mortgage payments (in Chicago, the number of defaulted mortgages increased from last year, while the number of filed foreclosures decreased 20 percent).

 

Once the foreclosure attorneys work out the backlog, I predict there will be a storm of foreclosure filings and sheriff sale dates. You are able to stop a foreclosure sale by filing a Chapter 13 bankruptcy before the home is auctioned off. If your home is already sold, your Chapter 13 bankruptcy option is gone. Do not wait until the last second – contact Geraci Law LLC. If you have waited until the last second, Geraci Law can file your case in as little as a day to save your home.

 

A new mayor took office in Chicago this week and has some ambitious plans to curb the effects of foreclosure. Mayor Rahm Emanuel in the 2011 transition report called for the mortgage providers to develop a strategy to prevent foreclosures. In the report, the new mayor demanded an inventory of abandoned buildings and to invigorate older foreclosure programs.

 

Current foreclosure prevention programs are available to Chicago residents including foreclosure counseling available through HUD-approved agencies. In 2010, the city sponsored “Fix Your Mortgage” events (using $1 million in stimulus funds) and helped over 2,200 homeowners with foreclosure. The report does not indicate whether the homeowners kept their homes or vacated the property.  According to the Department of Housing and Urban Development (HUD)’s Web site, the events help homeowners find out if they are eligible for a HAMP modification. 

 

The 2,200 homeowners pale in comparison to the 25,000 homeowners with a foreclosure filed in 2010. The success rate of the event is pretty comparable to the national success rate of loan modifications. Many people who apply do not qualify from the onset and despite submitting documents for a modification – a foreclosure is still inevitable.

 

So the success rate is pretty terrible in the Chicagoland area.  The national mortgage deficiency decreased last year and Chicago’s increased! According to the Chicago Tribune, approximately 7.75% of Chicago homeowners are at least 60 days behind on their mortgages – compared to the national average of 6.19%.  The city is helping a minimal percentage with counseling – but what if you are in foreclosure? What if you want to save your home? These questions do not seem to be answered by the counselors or a loan modification application nor the 22,800 other people faced with foreclosure last year.

 

A foreclosure crisis is not going to be curbed by housing counseling. Most people do not find themselves in foreclosure because they never had housing counseling – most people fall behind because of loss of income, high amounts of debt, or they were never able to afford the house to begin with. Counseling a person on the foreclosure process is not going to help them save their homes or retain homes years from now.

 

Bankruptcy is the way to do so. A chapter 13 is a repayment plan – through the federal court – allowing a person to catch up on mortgage arrears.  Depending on your individual situation and value of your home, a chapter 13 could eliminate your second mortgage. How’s that for a modification? You could pay back a small percentage of what you owe to unsecured creditors (i.e. credit cards, medical bills, etc.) and eliminate your second mortgage. If you can afford your home, Geraci Law, LLC can help you save your home.

 

If you cannot afford your home, if you could never afford your home – counseling is not going to help. You are able to apply for a loan modification; however the major mortgage servicers do not consider unemployment to be income.  Often, an unemployed person will apply for a modification only to endure years of “we lost your documents” or “it’s been transferred to someone for review.” If you are receiving unemployment with few job prospects, the probability of you qualifying for a loan modification is almost nonexistent. 

 

Again, a bankruptcy could help you. A chapter 7 bankruptcy would eliminate all of your other debt including medical and credit card debt and protect you against a mortgage deficiency (if one were entered).

 

Good luck to our new mayor. He was elected to a difficult position in a city where mortgages are falling further and further behind. Mayor Emanuel governs an entire city – as an individual you need to look at what is best for you. If you want to save your home, contact Geraci Law, LLC to find out your best option to get out of debt.

The worst part of the bankruptcy process is making the initial phone call. It’s inevitable –no one wants to file a bankruptcy and I do not think many people know enough about the benefits of bankruptcy to consider it an option. Bills are easy to ignore. No one wants to go to the mailbox to find collection letters and notices and if you have multiple creditors, the amount of bills can quickly become overwhelming and the idea of bankruptcy can become frightening.

 

Once you start opening the mail and bring out the calculator to add up your total debt, most people will try to call creditors to work out a payment plan.  The problem is, some creditors will refuse to work with you, most creditors will propose an unfeasible payment plan, and others will close your account, lower your credit limit and demand the balance in full. If you have ever tried to call your creditors, you understand talking to multiple “representatives” and feeling like nothing has been resolved. That is not very reassuring to someone calling for help.

 

After a failed attempt at working with creditors, many people try alternatives to get a handle on the debt.  Debtors seek out debt consolidation, credit counseling, or borrowing from retirement. Each option takes time.  Debt consolidation has no set time limit – you could very well be in a repayment plan for 10 years while paying interest, a payment to the debt consolidator and your monthly bills. A Chapter 7 bankruptcy on the other hand could be done (and you could be debt free) in as little as 3-4 months.

 

The majority of people who go through the agony of debt consolidation eventually seek bankruptcy relief. If you have more debt than income, if you can’t sleep at night because of worries about debt and if you are afraid to answer your phone – consider bankruptcy. It’s a sigh of relief when you hear the words, “we can help.”

 

The Social Security trustees report came out last week and discovered social security will run out earlier than expected. The trust fund is called the Social Security Old Age and Survivors Trust fund and originally the fund was supposed to pay out benefits until 2037 and now the date has been pushed to 2036.  After, the fund will only be able to pay out 77% of benefits.

Currently, it is estimated that 54 million people received retiree and disability benefits and these people have not received a cost of living increase in the last two years.  With the fund going bankrupt, they should not expect increase anytime soon.  The cause could be attributed to the high unemployment rates (less people paying into the trust) or the high, high, high costs of healthcare. 

 

So with higher premiums with health care and no raises in income, what does a person on a fixed income supposed to do? Bankruptcy is one option.  Your social security cannot be garnished but creditor harassment is terrible enough. If you have assets, you are leaving them exposed to creditor’s liens. Not to mention if you are making minimum payments with your fixed income – the payments are probably just going to interest.  Think about it, if you are paying $200 per month toward $20,000 of credit card debt – the $200 could go to paying for your prescriptions or rent.  If you put the $200 in a savings account, you could have $2400 saved in a year.

 

Filing a bankruptcy will eliminate your debt and you can develop a feasible budget with the required credit counseling and debtor education courses.  When the bankruptcy is discharged, you can put the money you were paying on the debt into a savings account to help with the inevitable increases in the costs of living and health care.  Instead of waiting for the trust to go bankrupt, get control of your finances now.

 

 

A common question for potential bankruptcy filers is what will bankruptcy do to my credit?  Your credit score is based off of multiple factors including: payment history, amount owed to all creditors, length of credit history, amount of new credit, and types of credit in-use. Your credit score will range generally from 300-800 and a financer contributes a low credit score to high credit risk.

After filing a bankruptcy, you are able to improve your credit score. People have been filing bankruptcies for centuries and rarely have issues getting more credit.  Taking on too much debt after a bankruptcy is where people get into problems. Once you file a Chapter 7 bankruptcy, you are not able to file again for eight years. Creditors want you to be in debt and may send offers with higher interest rates to entice you to get back into debt and you would not be able to file again until your time bar is up. 

 

Rebuilding your credit is important so if you want to take on more credit again you are able to do so with better interest rates and contract terms.  Understanding your credit score and can help you rebuild your credit so you do not need to file again in eight years.

 

So how is your FICO score calculated?  Your payment history is the biggest contributor to your credit score accounting for 35% of the credit score calculation.  Multiple late payments are the biggest hit to your credit score, even without a bankruptcy if you are not making payments your score will be in the 300s or 400s. If you file a bankruptcy, the debt is eliminated and you have a fresh start to rebuild your credit.

 

The amount of debt you are in is another big contributor to your credit score – the debt amount is 30% of the calculation.  After your bankruptcy is complete, you have ZERO debt. If you have zero debt, your debt-to-income ratio is stellar and if you make your payments on time post-bankruptcy you should be significantly better off than before you filed.

 

Length of credit history accounts for 15%, the amount of new credit for 10% and the remaining 10% is for the types of credit in-use. If you file a bankruptcy, you want to prevent filing again and applying for more credit with higher interest rates is not the way to do so.

 

Ultimately credit is not important after a bankruptcy. Saving money is the way to get back on track. If you want to make a large purchase, be prepared for a 20% down payment because it shows the financer you are investing in their loan to you. Give yourself some time to get back on your feet financially and you will be able to afford new debt if you choose to take more on.

 

Summer is here! It’s going to be 80 degrees in the Chicagoland area today and jackets are finally going back into storage.  Summer means sunscreen, sundresses, and of course increased spending.  If you are about to receive your discharge from a bankruptcy, it is important control your spending this summer and stay debt-free.  It is easier said than done.  If you are working, you may face the added expense of childcare or if you want to take a road trip you will face $3.81 per gallon gas prices (the national average). 

 

So to save money this summer, look at your bankruptcy petition schedule I form – this will show your monthly income and your monthly expenses. Look for ways to trim your expenses.  For example, instead of going to a restaurant to eat out – pick up some hot dogs and buns for grilling. Ask some of your family members, neighbors or friends to attend and have pot-luck meal. You would be outside in the summer heat and save money. 

 

Another example of cost-cutting is eliminating or amending your big summer vacation plans.  Summer is a great time to take a vacation because the kids are out of school; however it is also peak vacation time for resorts.  You need to set money aside and save for the vacation.  Instead of purchasing the trip on credit, have the money saved so you can enjoy the vacation instead of worrying how you are going to pay for it.  If you wait to take your vacation during slower months for hotels, the cost will be significantly less. Camping is another solution, you may have to pay for a permit but the cost will be less than a beach resort.

 

Most cities offer a plethora of activities for families in the summer months.  Going to free fairs in your local community or contacting your park district is an affordable way to make the most of your summer.  Options like the local pool will offer discounts for families and also for residents of the city.  Most churches and other nonprofit agencies will offer low-cost summer day camps for younger children.

 

With the cost of living going up, watch your spending this summer.  Create a feasible budget and stick to it.  Maintaining your finances is as important as SPF 15.

                                                                                                                          

When you hear the word bankruptcy, you probably think of Chapter 7 debt liquidation.  The assumption stems from a game like Monopoly where you go bankrupt when you have no more money, your assets have been borrowed against and you have nothing to do but admit defeat to your opponent, the battleship. But the little known cousin of consumer bankruptcy is Chapter 13 debt reorganization and realistically if you are working, Chapter 13 is probably your better option. A Chapter 13 bankruptcy could help you win the game!

 

So what is a Chapter 13? A Chapter 13 is a no-interest, no penalty repayment plan. Repayment plans are for people with steady income, if you are working part-time or are self-employed a promise to the bankruptcy court to make timely payments is unlikely.  But, if you are a salaried employee who is still up to date with minimum payments, a Chapter 13 will allow you to actually pay off the debt with out the crazy interest and penalties.  If you are paying back 10% of your debt, then at the end of your repayment plan, you will eliminate or discharge 90% (just like in a Chapter 7).

 

A Chapter 13 bankruptcy will keep your Chapter 7 option open if you were to lose your job or have some tragedy where a repayment plan would not work. Life happens and debt happens to anyone.  For example, you file a Chapter 7 while you were other else qualified for a Chapter 13 and eliminate your debt.  Then after your discharge you lose your job and have $30,000 in medical bills because of lack of insurance – you do not have a bankruptcy option for another eight years or until you find work and ultimately file a Chapter 13. 

 

Chapter 13 bankruptcies also protect your assets.  For example, if you inherited a house from a long-lost aunt, valued at $200,000 – a Chapter 13 will allow you to keep the property.  If you were to file a Chapter 7 bankruptcy, you risk losing your home.  When you file a bankruptcy, a bankruptcy trustee will look for anything of value to sell to pay your creditors. By filing a Chapter 13 repayment plan however, you are able to pay back your debt to protect your equity. Your attorney will protect as much as the law allows in a Chapter 7 but if your property cannot be protected, then a Chapter 13 repayment is for you. 

 

The best part of a Chapter 13 is the immediate relief.  A Chapter 13 bankruptcy with Geraci Law, LLC can be filed immediately.  Depending on your individual situation, you case could be filed for as little as the filing fee.  Attorneys do not require the bulk of attorney fees to be paid before filing unlike the Chapter 7.  If creditors are calling you constantly or if your wages are being garnished, quickly filing a Chapter 13 will stop the creditor harassment and the garnishment.

 

Chapters 13s also cover debt like taxes and parking tickets. You cannot discharge parking ticket debt with a Chapter 7 but you are able to consolidate and pay a portion back in a Chapter 13.  Debt from marriage settlement agreements can be taken care of in a Chapter 13.  Most importantly, a Chapter 13 bankruptcy can save houses and cars.  Because of the repayment, you are able to stop a car from being auctioned after repossession and you are able to stop a sheriff sale on your home. 

 

If you file a Chapter 13 bankruptcy, you are able to file immediately (with Geraci Law, LLC), pay back what you can actually afford to pay back, and protect and save your assets from repossession or liquidation by the Bankruptcy Court.  A Chapter 7 bankruptcy will just eliminate your debt and possibly your assets.  So the next time you are playing Monopoly, think twice about admitting defeat.  If you are working and have disposable income, think of a repayment plan.  A Chapter 7 will wipe out your debt and assets and I suppose you would lose, but a Chapter 13 could help you save your red hotels on Boardwalk and Park Place.

Recognizing you are in debt is the easy part.  I have spoken with many people who laugh about the severe amount of unsecured debt they accumulated. I’m missing to see the joke.  When you have a substantial amount of debt, it’s really not a laughing matter. Yes, creditor threats can be so ridiculous that it can seem comical. But, if collectors are calling you to the point of being afraid to actually answer your home phone – it’s time to put the comedy aside and do something about it.

 

With our current economy, a lot of Band-Aids for debt wounds are available. You can pay $10 per month minimum payment and sure the collection calls will stop but the debt wound still exists.  I have rescheduled more appointments for potential bankruptcy filers based on nothing more than “I don’t know if I want to file.” For most people contemplating bankruptcy, there is no reason not to file. With more debt than income, what are you supposed to do? Why spend the rest of your life, making minimum payments?  You are not moving forward – you are barely moving side-to side. I’m addressing the people with more than $10,000 in debt and are fully employed.           

 

For a working person, a Chapter 13 bankruptcy is a great solution.  You pay back what you can afford to pay back without the interest.  It answers the “moral” question of I spent it so I should pay it (is it moral for some creditors to slash your credit limit, increase your minimum payment, and charge you close to 30% in interest?).  Not to mention, a Chapter 13 repayment has no interest!  For people who are working and have credit card debt – the interest is what makes many people fall behind and get to the point of needing a bankruptcy. 

 

In a Chapter 13 you are able to protect all of your assets.  It’s a repayment plan so there’s no reason to lose your comic book collection or your Porsche 944. Depending on your individual debt, income, and assets you could be paying as low as 10 percent of what you owe.  A filed Chapter 13 bankruptcy allows you to keep your Chapter 7 option available – just in case. Life happens and having the safety net of Chapter 7 debt liquidation is comforting.

 

Realistically, if you have more debt than income in a month and you want to want to get a handle on things – bankruptcy is your best option.  It is the sane way of getting control of your situation.  I have heard more make-shift solutions for paying off debt and ultimately whether it’s today, tomorrow or five years from now, these people file a bankruptcy.  Debt is not a laughing matter; it can be a bar to your financial future.  Instead of doing the debt negotiating, money borrowing, ignoring dance of the debtor – file a bankruptcy and in a couple of months you can actually feel some relief.

 

Blame the economy, the job market, the cold weather, choose any reason you want but a wave of “boomerang” children are moving back in with their parents.  The phrase boomerang child defines an adult dependent that moves out on their own and ultimately returns (like a boomerang) to their parent’s home. If a child loses their job or has a different loss of income, the child turns to parents for financial support.  Generally, the parents are either retired and on a fixed income or are having financial problems of their own.  Parents need to draw a line in the sand defining how much financial help they are willing (and able) to provide.

 

Making payments to save a credit score is ridiculous especially if it causing you to fall behind on your own debt. You can assume with a job loss, a possible apartment eviction/foreclosure and high credit card debt, your child probably does not have good credit now. Not to mention the additional expenses with having another full-grown adult living with you.  All of a sudden you have two mouths to feed instead of one. Additional cost for utilities and other expenses can double when you have an adult child back at home.

 

You need to feel comfortable with how much you are willing to help your child. Approach providing financial help to your children as a financer would to you for a loan.  Think about your child’s financial history and payment history.  Think about whether you want to loan the amount or if you do not expect repayment, you can gift the amount.  If you child has quit three jobs and “boomeranged” three times back into your household, co-signing a loan and paying for their financial mistakes will not help you or them.  You need to answer how much is too much? Helping your family is one thing, digging yourself a financial grave is another.  Bankruptcy can be a great solution to help you and your child.

 

Instead of paying the minimum payments on their debt, pay for their bankruptcy attorney to eliminate their poor past financial decisions.  You and your child could create a budget to live by until your child gets back on their feet.  By eliminating the debt with a Chapter 7, your adult child can focus on job-hunting and eventually move out of your home. 

 

As a parent, you never want to say no to your child. By allowing them sanctum in your home, you are providing them shelter from the difficulties (especially financial difficulties) that come with adulthood.  Protecting yourself is also important, you want to live within your means and help your child find a solution their problem.

 

If you want some additional information and solutions, please click here.

 

If you were like me and set your alarm promptly at 5:00 a.m. to watch some of the Royal Wedding coverage, you saw the elegance and luxurious prince and soon-to-be- princess walk down the aisle.  Amidst economical turmoil and a never ending amount of rainy days, the sun came out and the wedding for this generation went on without a snag. 

 

The bride and groom decided to walk down the aisle during a terrible economic time. Britain’s economy is shrinking and the unemployment rate is close to 7.7% (as of January 2011). Taxpayers will pay close to $20 million for security for the affair.  During these hard times, who is going to pay for the costs? Taxpayers? No. It’s the Royal Family themselves. If you have a child, start saving now.  The wedding industry is estimated to be a $4 million industry.

 

When you convert the cost of Prince Charles and Princess Diana’s wedding (approximately $48 million in 1981) to today’s dollars the cost comes to an estimated $110 million.  The Royal Family is spending an estimated $34-$50 million in today’s dollars on Prince William and Kate’s wedding. 

 

Debt and a tight budget affect everyone including royal families.  According to Forbes in 2009, Queen Elizabeth II’s net worth was close to $450 million and now her majesty’s worth is closer to $420 million.  With income and net worth that high (despite a $30 million decrease in 2 years) a $50 million wedding seems like chump change. But the Royal Family said they would keep the wedding an elegant but restrained event to be mindful of the dreary economic times. 

 

When you compare the amount to the cost of Prince Charles and Princess Diana’s wedding, the royal family could be keeping a budget. The affair will generate revenue for the country itself but Budgeting is important to those even with tiaras.  Even though the Royal Family’s budget is much larger than us civilians, the principals are the same.  You need to live within your means. It’s just our means are a $40 ice cream cake from Baskin Robbins and theirs is two wedding cakes costing $80,000.

What will a bankruptcy do to my credit? The most redundant question asked by potential bankruptcy filers. The simplest, straight-forward answer is you don’t have good credit now! 

 

When it comes down to it – there are two major reasons you call a bankruptcy attorney. Number one, you received a lawsuit summons or collectors are calling like crazy.  This means you have not made a payment in some time; your creditor tried contacting you directly and failed so sold the account to a collection agency.  The collection agency tried contacting you directly and failed and hired an attorney to sue you for the balance to try to recoup some of the cost from purchasing the account.  The biggest contributor to your credit score is timely payments – not only did you not make timely payments to your original creditor but the collection agency adds so many late fees there is no way for you to get caught up.

 

Solution – you file a bankruptcy. You eliminate the poor credit history and at least you have an opportunity to rebuild. In phonebook ads, organizations offer credit cleanup for a substantial fee. Realistically, there is nothing they can do.  The only way to eliminate something from your credit report is to dispute it (and win the dispute) and if you ignored the collection calls, you really don’t have a leg to stand on.  Post-bankruptcy you stay current with your car note, mortgage payment, student loan payment, etc. you can reestablish your credit with timely payments.

 

Second major reason – you have made payments on time but your credit cards are maxed out and you just found out about a loss of income.  Whether your hours and overtime are going to be cut or if your monthly expenses increased and your fixed income cannot cover the costs and minimum payments, you call a bankruptcy attorney because in the foreseeable future you will not be able to stay current. 

 

Again, you do not have good credit. In actuality, you have too much credit.  Another major factor when applying for financing is your debt to income ratio.  If you have $60,000 in credit card debt and are making $35,000 per year, you will never pay off the debt.  Even if you do, you will be paying significantly more in interest than anything else. A financer will see the current payments but will also consider you have a tremendous amount of debt and a significant portion of your paycheck is going to minimum payments (well realistically to interest).

 

Solution – you file a bankruptcy.  Post-bankruptcy, you have no debt! All you have is income! Again, you make your payments on time and put money into a savings account and you will be fine.  Bankruptcy is one of the country’s oldest laws and people have been able to “reestablish credit” for centuries.  

 

Bankruptcy is like Game 7 of the Stanley Cup Playoffs.  You can win and move on with a fresh start to erase the losses or you can go home still in debt – ashamed of the fact you can’t get a puck past Roberto Luongo.

I went to use my debit card at this little bakery this past weekend and the cashier (who presumably was also the store owner) said she would offer me a 5% discount if I used cash.  Cash will always win over plastic. With cash, you know how much you have to spend and can easily budget to live within your means. My experience at the bakery opened my eyes; I saw gas stations offer cheaper gas prices if someone used cash. Self employed cab drivers will knock a couple of dollars off of the fare if you use cash.

 

It makes sense, cash is king.  Using credit cards often does not help you or the business.  While the good ole’ plastic maybe convenient, it costs the merchant money to accept your credit card payment.  Not to mention, if you are only paying a minimum payment on the credit card, it costs you money to use the plastic. When you are paying only minimum payments, you are throwing away good money to bad interest.

 

Filing a bankruptcy forces you to live within a budget. When you file a bankruptcy, you cannot use your credit cards and you see how to live within your means for at least the duration of your bankruptcy.  After your discharge, if you continue to use cash instead of getting into credit card debt again, you will stay debt free and begin rebuilding your credit.  Not to mention – 5% off a lemon meringue pie for using cash? Sold.

 

I thought public schools were free? Public schools are not allowed to charge tuition but high fees for a public education can send anyone’s budget into a tizzy.  In Chicago for example, most public schools require fees to rent or purchase books and the amounts can climb (quickly) to $400 per child.  That number is not going down anytime soon, last year and for the third year in a row, Illinois cut the school budget for textbook costs. So if you have kids and debt, get rid of the debt so you can afford your kids.

 

There is a calculator at www.bankrate.com to calculate the cost of raising a child.  The average cost for a child age 0-18 is $190,528 and this amount does not include the costs of college tuition or health care.  For example, according to www.finaid.org, the average costs for students attending four-year public colleges and universities were $15,213 plus an additional $4,000 for textbooks. 

 

If you have young children, start saving now.  If you have to pay $400 per child in textbook rental fees and you have 3 children, you’re looking at $1,200 to pay for your child’s public education. It would be nice if that was the only other hidden charge but Illinois schools also charge for:

 

- Use of school property (lockers, towels, laboratory equipment)

- Field trips

- Uniforms and equipment

- Participation in extracurricular activities

- School functions, i.e. prom

- Participation in class, i.e. home economics materials, shop, etc.

- Graduation fees

- School record fees

- Driver’s education fees

- School health service fees.

 

Fixed incomes beware – kids are expensive. Even when public schools claim to be free, you are looking at some money to pay for your kid’s future. We all want the best for our children and being able to budget and pay for school costs would be a lot easier eliminating or consolidating the other debt.  The $400 minimum payment going to credit card interest could be the $400 payment charged to rent books at your child’s elementary school. 

 

You cannot blame the schools – with budget cuts you have to make due. But you should be cognizant and the costs of public education and your finances. Filing a bankruptcy would eliminate your debt and allow you to put money away for your child’s future. 

If a bankruptcy law office was like an all request line at a radio station for dischargeable debt, the number one request would be parking tickets.  When you have other debt and are already living paycheck to paycheck, the parking fines are moved to the back burner causing interest and penalties to add up – quickly.  If you ignore the ticket altogether, you may find yourself with a suspended drivers license and thousands of dollars in parking tickets.

 

So the not-so-good news - you cannot eliminate parking tickets with a Chapter 7 bankruptcy. But, you can consolidate the fines in a Chapter 13 to reinstate your driver’s license. Let’s say you’re a delivery driver and all of a sudden your driver’s license is suspended.  You will ultimately lose your job and be unable to pay on the debt.  However if you file a Chapter 13 bankruptcy you can get the license reinstated hopefully before your employer finds out there is a problem.  A Chapter 13 with Geraci Law, LLC can be filed for little to no money down in as little as one day.

 

There are four different payment plans with the city. The first is for people with less than $500 of parking or red light tickets. A person is required to put down at least half of the ticket amount as a deposit. You could file a Chapter 7 to get rid of any other debt and get on payment plan with the city for the tickets.

 

Another payment plan offered by the city is for people with over $500 in parking tickets. This payment plan requires a deposit of $500 or at least 25% of the parking or red-light fines (whichever is greater).  If you have a significant amount of parking tickets and other debt, you are much better off filing a Chapter 13. You can pay off your other debt and take care of the parking tickets.

 

So the last two payment plans were for debtors who still have valid driver licenses. The third payment plan is for people with booted cars and license suspensions. This would apply to the delivery driver example. To get on a payment plan, you would need to pay a $750 deposit or 50% of the tickets – whichever is more. File a Chapter 13 bankruptcy! You can file a Chapter 13 for less than $750 and get your license back. The repayment is interest and penalty free and again you can get your license back!

 

It is frustrating to get $100 ticket for being a minute late to pay the meter. But, do not let the tickets get out of hand. If you have a driver’s license suspension and stable income, do not fret. File a Chapter 13 and soon enough you’ll be back behind the wheel.

 

In this current housing market, the word foreclosure is becoming as popular of a dinner conversation as which celebrity is going to rehab this month.  Foreclosure (and bankruptcy) is not as taboo since you probably have a neighbor or a family member facing the big f-word.

 

Once most families hit the 90^th day of arrears (when most mortgage companies start reporting to the bureaus), most start thinking about whether the home is worth saving.  You think your children grew up at the home but you owe $250,000 and the house is worth $150,000.  So let’s look at some options to look at the big financial picture

 

Option 1. You want to save the house. You have invested too much blood, sweat and tears to let the house go and you are about even on what you owe and how much the home is worth.  But you are a couple of payments behind, your mortgage company has stopped returning your calls and you can afford the house.  Affording the house is key – you need to be able to make your mortgage payment and be able to buy food, water, gas, etc. So, you file a Chapter 13 bankruptcy. A filed Chapter 13 will stop all foreclosure proceedings and allow you to spread out the arrears of your home in a 3-5 year repayment without the crazy penalties imposed by your mortgage company.  You can save your home up to the day of the sheriff sale with a filed Chapter 13 bankruptcy.

 

Option 2.  You cannot afford your home because of a home equity loan you took out a couple of years ago. So now, you have a first mortgage payment with a balance of $250,000 and a second mortgage with a balance of $50,000 and your home was recently appraised at $200,000. You are able to make your first mortgage payment but live off of credit cards in order to stay current with your second mortgage. It is possible to strip the second lien – meaning you file a Chapter 13 bankruptcy consolidate the credit card debt and at the end of the repayment plan the balance of the second mortgage could be eliminated. Now, there are no guarantees here and you would need to meet with an experienced bankruptcy attorney to possibly get rid of the second mortgage.

 

Option 3: You cannot afford the house but you cannot afford to move quite yet.  Maybe there was job loss or an income reduction but you are choosing between food and your mortgage payment each month.  You have tried working with your mortgage company and the idea of a loan modification is laughed at by your lender. The silver lining is foreclosure takes time – stay at the house, keep it insured and you have free rent. Think about it – the $1500 mortgage payment you are struggling to keep current each month could go toward getting back on your feet. The average time foreclosure takes 17 months. You have 17 months of free rent – that is $25,500 of mortgage payments that could go to getting yourself back on stable financial ground. Your bank took advantage of you so why not take advantage of the bank. I constantly get asked about the morality of staying in a home rent free. My answer is – is it moral for a bank to give you a $350,000 mortgage loan with zero money down when your annual income is $30,000?

 

Deciding the future of your home is not an easy decision. When you are faced with financial hardship, it is difficult to stomach the loss of an investment. But what are you supposed to? Geraci Law, LLC are professionals at saving homes or providing legal resources to homeowners struggling with mortgage payments.

At some point, everyone will apply for a loan.  When you apply for a loan it is important to look at the terms, the APR and actually read the contract.  If the lender tells you a co-signer is required for the loan, then it’s time to walk away.  I know the new car is pretty but think about the long term repercussions if you cannot afford a loan on your own. Co-signing a debt for someone can be a dangerous undertaking.  You are asking someone to pay for the debt or loan if you are unable to.  If a co-signer is required to get the loan, you should look at your loan application to see what you can improve.

 

The amount of debt you are in compared to your income can affect your ability to get a loan.  If you have more debt than your annual income, your loan servicer is taking on a risk by giving you more credit. Filing a Chapter 7 bankruptcy would eliminate the other debt allowing you to rebuild your credit to qualify for a better loan.

 

Another factor is timely payments.  A big contributor to your credit score is payment history.  Missed payments are a sign of your ability to pay creditors – if you have a poor payment history, a potential lender may require a co-signer to ensure payments will be made.   You can get a free annual credit report from our Web site, www.infotapes.com, and look at it. If you have more debt than you can handle, consider a bankruptcy. In the long term, you will probably have a better loan than you would right now and possibly better relationships with your potential co-signers.

 

If someone asks you to co-sign on a loan, say NO! It is becoming more and more common parents of adult children file a bankruptcy because of the additional financial burden.  Even if you trust the person, things happen. Many people do not plan on losing jobs or defaulting on loans but it happens everyday. If you are a co-signer for someone with bad luck, you are just as responsible for the debt as they are. Often, a car will be repossessed (for example) and if the person you co-sign for is out of work, the creditor will come after you and your wages. 

 

When applying for a loan, the servicer will look at the amount of your down payment. The recommended amount is 20 percent. If you try to increase the size of your down payment there is less of a loan to finance.  A co-signer attaches themselves to your financial future – you are asking them to pay the debt if you do not. Instead of co-signing, ask your friend or family member if they will gift you money for your down payment if they love you that much. You friend or family could give you the money and protect themselves from possible financial hardship.

 

Ultimately you are probably helping your family member or friend by refusing to co-sign for a debt. You are telling the person to get a handle on their financial situation – whether by filing a bankruptcy or finding a better loan provider.

  

It’s getting close to wedding season when people like me trek back and forth to Bed, Bath and Beyond every other weekend.  I get the love stuff – like replacing I with we and how she’s met the man of her dreams but what about the financial repercussions? Marriage is a binding contract between two people to join their lives and their financial futures.  How does one person with zero debt and “perfect” credit fuse finances with another person with $50,000 in debt? The answer can be found in bankruptcy.

 

Now, depending on your state, assets and financial decisions of one spouse do not necessarily affect the other. Illinois, for example, is not a community property state but Wisconsin is. Community property related to bankruptcy means any debt that occurred while you were/are married can be either spouse’s responsibility.  If you have no debt but your spouse abuses the credit cards, all of sudden your good credit is tying the knot with your spouse’s debt.

 

Boy meets girl. Boy falls in love. Girl maxes out her credit cards.  Before the boy proposes, there should be a serious discussion about a bankruptcy. If the girl files and eliminates all of her debt, the boy and girl can enjoy debt-free marital bliss. A chapter 7 bankruptcy can eliminate all the old bad debt and provides an opportunity to rebuild credit as a couple.

 

So what if you and your betrothed both have debt? You could file separately before the wedding but instead of paying one attorney fee you would be paying two. Instead wait until after the wedding so you are able to file a joint bankruptcy and again, enjoy debt freedom as newlyweds. You could register for a family member to pay your attorney fees.  It’s a great bargain – financial freedom as a gift for you and your soon-to-be spouse.

                                                                            

Before actually calling a bankruptcy law firm and speaking with an experienced consultant, many people try alternatives to get rid of the debt. Often, these alternatives either increase the debt because of missed payments and broken promises by debt settlement firms or complicate the inevitable bankruptcy.  If you are at the point of no return with your debt, bankruptcy is the most efficient way to get a handle on your bills. Let’s review what to avoid doing before a bankruptcy.

 

A common solution for debt is for someone to borrow money from friends or family members to pay off the bills. If you have less than $3,000 in debt, this might be a good option – especially if you have a family member or friend who loves you that much. The problem arises when you have close to $30,000 in debt. If you borrow money and do not pay off ALL of the debt, you are still in the hole and owe a friend or family member money. Do not pay the friend or family member before your other bills. If you are considering a bankruptcy or are in the process of retaining a bankruptcy attorney, repayment to friends and family could delay or prevent your bankruptcy filing.

 

Another solution is taking a withdrawal from your retirement account. Your retirement funds are put in a separate account for a reason and the penalties for withdrawals are there for a reason. Taking a withdrawal to pay off part or all of your debt can result in tax penalties. Unless you are going to pay all of the debt and tax penalties you will still be in the red.

 

Desperate times call for desperate measures as the saying goes. Often, many people will try to quit claim a property or transfer an asset to avoid problems with the bankruptcy. However, the transfer of an asset will not only complicate your bankruptcy but could bar you from filing.  A bankruptcy petition is full financial disclosure and not listing transfers or quit-claims could be considered bankruptcy fraud. Before you do anything drastic, please call a bankruptcy law office.

 

The most obvious solution is using your savings account to pay debt.  Your savings account is there for emergencies. If you are using your savings account to just stay current with minimum payments, eventually your account is going to be empty and you will still have a big balance of debt. Filing a bankruptcy will eliminate the big balance of debt and protect your savings.

 

When the creditors are calling from dawn til dusk, it is easy to unplug the phone and try to ignore your reality.  However, debt does not disappear.  Waiting until you have depleted your savings account, retirement account and transferred all of your assets is ultimately going to do more harm then good.  If you want a chance to rebuild your credit and have a successful financial future, consult a bankruptcy law firm.

When I was growing up, my parents stressed the importance of education – not only high school but higher education. Like many families, the cost of college for their children is not only daunting but can be downright frightening. According to a study done by the Department of Education, the average costs for both private and public institutions went from $3,499 per year for the 1980-1981 to $20,435 in 2008-2009 school years. Many parents do not have $20,435 saved up for one year of school for their children, let alone $81,740 for four years of education (in 2008 numbers).

 

With costs of living increasing every year and the current economy forcing many to return to school, the availability of scholarships is becoming scarcer.  Parents want their children to go to college and are often forced into taking on student loan debt. When many families are facing the reality of their debt and decreasing household income, the question becomes, “will a bankruptcy make me illegible for student loans?”

 

The easy answer is no. According to the Bankruptcy Reform Act of 1994,

 

“A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act”

 

Now the actual text reads like a lot of mumbo-jumbo, but in short it means a bankruptcy alone cannot deny your student loan eligibility for federal student loans including the Perkins Loan. But there are other factors a student loan lender will look at. Lenders can consider debt discharged in bankruptcy as evidence of a bad credit history but cannot deny a potential student based on the bankruptcy alone.  My argument is, if you have $75,000 in debt and $40,000 in income – your ability to pay back the new student loan debt becomes skewed.  If you file a bankruptcy, you eliminate the debt and all you have is income?

 

Post-bankruptcy credit history can be another factor. So, if you just received your discharge – make sure to make your payments on time and put money into a savings account. Who knows – getting rid of debt could allow you to save enough money to pay for college and the student loan eligibility becomes moot?

It’s April – a time for rainy days, flowers, and of course taxes.  If you are someone who is trying to negotiate your debt and have been successful, this tax season you may find a 1099-C form in your mailbox. A 1099-C is an IRS form given to debtors who have settled debt or creditors have cancelled debt.  Debt negotiation companies fail to tell many people to file on settled debt. You know what you don’t have to pay taxes on? Discharged debt from bankruptcy.

 

A 1099-C is required to be filed regardless if you claim additional income or not. You will probably receive a 1099-C if you have settled debt over $600.00. There are exemptions to the form – for example, you do not have to list if the debt is cancelled by a foreign branch or you do not have to file if you settled the interest.  Settled debt can be taxable so when you’re preparing your taxes this year and have settled debt, make sure to check with the IRS or your accountant. For additional information on 1099-Cs, please click here.

 

Debt settlement does NOT work. Not only, do creditors often refuse to work with you but you get taxed on the settled debt? You leave yourself unprotected against lawsuits, creditor calls and increasing interest. If you have a significant amount of debt, save yourself time, money and stress and look into a bankruptcy.

                                                                  

Whether it was the Teenage Mutant Ninja Turtles or the 30 minute delivery or free ads, pizza became and has stayed the country’s favorite food. Everyone loves a good slice – whether it’s during a football game, business meeting, or your child’s fifth birthday party.  America’s favorite dish however seems to be struggling.  There have been multiple popular pizza places filing or finishing bankruptcies over the last year.

 

Pizzeria UNO emerged from bankruptcy last year; Chicago-based Giordano’s entered bankruptcy in February and just earlier this week shopping mall food court favorite Sbarro Pizza filed a Chapter 11. America’s favorite food providers are succumbing to higher food costs and competition from frozen pizza (it’s not delivery it’s Digiorno – for example).  With multiple locations closing and other fast food alternatives – what is going to happen to family pizza Friday?

 

Pizza lovers fear not – a Chapter 11 bankruptcy allows the company to continue operations and according to the Pizza Today (yes it is an actual news source), the pizza industry is still earns approximately $38 billion each year.  These pizza professionals filed for bankruptcy protection to continue to provide the pizza pies. Without bankruptcy law, where would you snack after visiting the mall? Where would Chicagoans get their deep-dish?  Bankruptcy helped your dinner provider and could help you with your own debt.

                                                                  

Homeownership is said to be a pillar of American values.  Many immigrants moved to our fair country with the prospect of owning a piece of land.  Bankruptcy is not the end to the American dream – on the contrary, getting yourself out of debt might afford you a better opportunity to some day own a home. 

 

Despite having a bankruptcy on your credit report, you may still qualify for a loan.  Before you purchase a house, look at your monthly income and your expenses. Ideally, you should not spend more than 30% of your monthly gross income on your mortgage, taxes, homeowners' association dues and insurance.  Too many people find themselves “house poor” and are not able to save money or actually enjoy the home.

 

A resource available to potential homeowners is a Federal Housing Administration (FHA) insured loan.  Since 1934, FHA loans have been an option for low down payments, low closing costs and for people with not-so-stellar credit. 

 

According to the FHA’s Web site, a person can qualify for a FHA loan in as little as two years after filing for a Chapter 7 bankruptcy and could theoretically apply for an FHA loan while in a Chapter 13 repayment (with court approval and timely payments).  For potential homeowners with a foreclosure or an executed deed in lieu, the wait time is three years.  So, with a foreclosure and NO bankruptcy – a potential homeowner would have to wait (theoretically) longer to purchase a home and still have unsecured debt?

 

After bankruptcy, you may not need an FHA loan.  A major factor for lenders is the size of a down payment – preferably a 20% down payment could eliminate the need for private mortgage insurance or PMI and show you are a serious purchaser.  For example, let’s say you have $70,000 in credit card debt and are making minimum payments of $700 per month (according to www.bankrate.com, you will be paying $700 with 18.9% for more 30 years).

 

If you took the $700 per month and put the money in an interest-bearing account, you could save $42,000 for a down payment on a home in as little as 5 years.  Post-bankruptcy, you have no other debt and would be able to save money for your goal of homeownership.

 

As Former President Bill Clinton said, “[T]he objective for young people, with their futures before them and their dreams fresh in their minds, starting out their families, to be able to own their home and to start a family in that way, that’s a worthy objective.” Bankruptcy is not a bad thing - it is a solution to become debt free and can be a way for debtors to achieve financial goals.

 

To look at other FHA requirements, please visit www.fha.com.

To read President Clinton’s speech on the National Homeownership Strategy, please click here.

On Check N' Go's Web site there is an advertisement of a young hound puppy with the phrase, "Life can be unpredictable. For those times we're here. Quick approval time. Less than perfect credit. Pay back on your next pay period" The ad also includes a quaint sign stating "Veterinary Hospital."  Way to play on emotions, Check N' Go.

Payday loans can be considered a necessary evil – when you need money for food, rent, Fido’s check up, etc. and have no where else to turn a payday loan seems like a good option. When you're desperate, it is easy to skim the lines of the contract and mindlessly hand over a check. But, the payday loans will make you pay, and then pay, and then pay some more.

 

The consequences seem to heavily outweigh the actions of taking a payday loan. For example, you are short on rent and need some extra cash for your landlord.  You take out a payday loan for $500 and with an APR of 842.31% in as little as 13 days the bill will go to $650.00 if all payments are made on time. If you need to extend the loan, it is an additional charge for the extension. If you miss a payment, the lender can take the money from your bank account or proceed with a wage assignment and deduct the funds directly from your paycheck. It’s a vicious cycle – often to stay current with payday loan payments, you take out another payday loan, and another and another….

 

Filing a bankruptcy will stop payday loan harassment. A chapter 13 bankruptcy will stop the crazy 1000% interest on some payday loans and a chapter 7 will just eliminate the debt.  Geraci attorneys can send over notice to your payday loan lenders to stop the deductions from your account before your case is even filed.  If you have zero debt then you should be able to afford a vet visit without the payday loans.

 To see full ad, please click here.

- Despite technical problems, Geraci attorneys get the job done. A client came into our office and the client's car was going to be auctioned 3 days later and the Geraci attorney filed the case in ONE day and saved the client's vehicle!

- A client arrived at the 341 Meeting of Creditors without a cell phone and forgot to arrange a ride. The Geraci attorney representing the client lent their cell phone and waited until their ride picked them up.

- At the 341 Meeting of Creditors, the client was worried about their own case while listening to errors made by a different law firm for another case. The Geraci attorney sat down and explained the mistakes by the other attorney and took the time to explain what would happen at their own meeting to reaffirm the client hired the right place.

Addressing the alleged failures of other Illinois bankruptcy attorneys was not the original purpose of this blog but the weekly indictments are making it difficult not to tackle the importance of finding a good (and honest) attorney. The newest debacle involves an Illinois attorney in the Western suburbs.

This is not the first disciplinary rodeo for this attorney. In 2010, this attorney was suspended on an interim basis because she, “overreached an attorney-client relationship, exerted undue influence on clients, charged in excessive fees without authorization from the bankruptcy court, and in some cases, without her clients knowledge or consent, engaged in dishonest conduct.” In this article by the “Illinois Lawyer,” there are 26 other attorneys who were suspended and 12 attorneys who were disbarred.

In this attorney’s current indictment, she has been accused of bankruptcy fraud and is facing felony charges. Some of the indicted attorneys have been practicing bankruptcy for years and others appear as if from no where when the economy takes a dive. While this attorney defends her allegations, clients are trying to figure out who is representing them and their financial interests.

Attorney Peter Francis Geraci and his firm Geraci Law, LLC have been around for the last 35 years. We are here to help the people who want to help themselves. This is not a fly-by-the night, waiting for an inevitable indictment kind of law firm. We’re here to help the good people with bad luck get out of debt.

To read the article in the Illinois Lawyer about the 2010 disciplinary actions, please click here.

When you hear the word bankruptcy – the negatives, the misconceptions immediately come to the forefront to define the word. The word bankruptcy has been dragged through the mud almost to the point of no return. It’s so unfortunate considering bankruptcy has helped so many people for hundreds of years become debt free. A big misconception is the public thinks there is only one type of bankruptcy. A chapter 7 liquidates debt and immediately the public assumes a debtor would lose their house, cars, and other assets. However there are actually 6 different chapters of bankruptcy outlined in title 11. There are two consumer bankruptcies – a chapter 7 and a chapter 13 and below I have outlined the other chapters of bankruptcy for your reading pleasures.

Chapter 9

A chapter 9 bankruptcy is available only to municipalities. A chapter 9 is reorganization not an elimination of debt. Chapters 9s are rarely filed and the most used example is the 1994 filing of Orange County, California involving millions in municipal debts.

Chapter 11

A chapter 11 bankruptcy is for businesses or individuals with more debt than chapter 13 debt limitations allow. Under a chapter 7 bankruptcy, a business will generally stop operations – chapter 11 bankruptcies will allow the business to continue to operate while continuing bankruptcy proceedings.

Chapter 12

Until 1986, there was not a bankruptcy code directed toward farmers. A chapter 12 bankruptcy allows family farmers and family fisherman to propose and follow through with a plan to repay all or part of their debts. Chapter 12 bankruptcies are far less complicated and generally cheaper than chapter 11s and allows for more debt than a chapter 13 repayment plan. There are qualifications outlined in the bankruptcy code for debtors to call themselves family farmers and fisherman including more than ½ of the outstanding stock or equity must be owned by one family and its relatives and if the corporation has stock it cannot be publicly traded.

Chapter 15

A chapter 15 was added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This section deals with jurisdiction and is often used as a supplement for corporate bankruptcies with holdings in other countries.

Retirement. I cannot wait to relax and enjoy the well-deserved rest after years of waking up to an alarm and living by deadlines. I have years to go but many people are getting closer and closer to the golden years. With social security going - well bankrupt, many soon-to-be retirees need to take a good hard look at their 401Ks, IRAs, and pension accounts once they shut the door on full-time work.

A study done by Boston College called, “The New Unemployables,” found 30 percent of people ages 55+ owed more in credit card debt than saved in retirement accounts. So continuing the minimum payments (getting them no where) means come retirement, the person has more credit card debt and less income. If you’re working full-time and are struggling with the credit card debt, paying the debt off or down will not get easier with retirement – actually with less income and potential increases in medical expenses will make payments more difficult.

Most experts agree using retirement savings to pay off credit card debt is a bad idea. More often than not, a person will take a 401K withdrawal only to pay a portion of the debt. This is problematic because debt still exists and the minimum payment is still due the following month. Not to mention, the tax penalties for early withdrawals. Unless you qualify for a tax exemption for the withdrawal, you are subject to an early distribution penalty of 10% additional tax.

Moral of the story is to file a bankruptcy before thinking about retirement. Filing a Chapter 7 bankruptcy will eliminate all of the debt so you are able to readjust to your new income. While you're working, a Chapter 13 repayment plan will pay off your debt in 3 – 5 years, protect all of your assets so you are debt free before your retirement party.

You’re going into retirement – you are supposed to enjoy it. Spend time with the grandkids and go on sunny vacations. You do not need the sleepless nights and headaches of creditor harassment and 30% interest rates.

To read the study by Boston College, visit http://www.bc.edu/content/dam/files/research_sites/agingandwork/pdf/publications/IB25_NewUnemployed.pdf .

One reason many people find themselves in debt is because they are simply living beyond their means. It’s an easy trap to fall into - advertisers want you to spend money on products and creditors initially offer great zero-low interest rate credit cards. The problem is once you start missing payments, the creditor claiming to be friend quickly becomes foe. Below is a list of different types of expenses and example of how to save for a luxury item. Maybe you recently filed a bankruptcy and want to create a budget or you need to file a bankruptcy but want to get a jump start on financial management. Either way, knowing your expenses is important so when you do want a little extra cash for the next “big thing,” you’re able to save for the expense. So let’s run through an example on budgeting for an iPad 2.

The new iPad is sleek and cool and starts around $499 according to Apple’s Web site. You want to save so you do not have to purchase on credit. Our example saver makes approximately $3,192.00 net per month working a full-time job and recently filed a Chapter 7 bankruptcy and has zero credit card or medical debt.

Creating a budget to save for the wants is important (I know, I feel like I need one too). Step one is listing your fixed expenses. Your fixed expenses do not change from month to month. For example, your rent or your mortgage payment (if paid on time) will be the same amount each month. In our example, our person pays a $989.00 mortgage payment including taxes and insurance. Another fixed expense is car insurance and our person pays approximately $100 per month. So subtracting fixed expenses from the $3,192.00 net income leaves our guy with $2,103.00 for other expenses.

After listing fixed expenses on your blossoming budget, you need to list your variable expenses. As evident by the name, these expenses vary. Examples included clothing, food and utilities. Unlike the fixed expenses, you can save by spending less on your variable expenses. For example, if our saver wants to purchase an iPad 2, then maybe he eats at home more instead of going to a restaurant. Variable expenses will change and the saver (for the most part) can control major fluctuations. With utilities, clothing, and food costs, our example person spends on average $800.00 per month leaving him with $1303.00 for other expenses.

Periodic expenses only happen once or twice a year. Holiday spending, taxes and vehicle registration are all examples of periodic expenses. Like the variable expenses you can curb how much you want to spend by cutting costs on gifts for Christmas, etc. In our example, the man owes some back taxes and is currently on a payment plan for $450.00 per month leaving him with $853.00 per month.

Now, our saver has a budget. Each month he has $853.00 to put toward periodic expenses and other variable expenses. By creating a budget, he can safely set aside $166.33 per month and purchase the iPad2 in as little as 3 months. Budgets are important especially post-bankruptcy – your debt free and want to stay that way.

A foreclosure is over when a house is sold at a sheriff sale. The title is transferred and the debtors are no longer homeowners. When a home is set for auction, mortgage companies are done working with debtors. Ultimately the mortgage company decided it would be more cost effective to let the property foreclose versus working out a loan modification.

But there’s hope! To stop a sheriff sale, the debtor needs to file a Chapter 13 bankruptcy. If you can afford your home, you can keep your home. (Repeat after me.) A chapter 13 bankruptcy is going to cost the same amount anywhere you go in your home state. You should go to the best.

Recently, our firm successfully saved a debtor’s house. This person called one of our experienced consultants after being turned away from other attorneys. Our consultant promptly scheduled the debtor to meet with our attorneys. The problem was not being able to afford the house; the problem was trying to pay over $50,000 in arrears all at once. Within an hour, the debtor drove to our office and was filling out paperwork. The hopeless homeowner arrived at the office at 10 a.m. and the house was due to be sold at noon.

Our attorney at lightening speed created an affordable repayment plan and filed the petition with the court. This debtor was able to save the house because on a whim called a law office looking for help. Now, the debtor is living happily in the house and making timely payments to the Bankruptcy Court paying down the arrears.

An average attorney can take weeks what our law firm was successfully able to do within hours. You pay the same in attorney fees with a Chapter 13 – why not go to someone with compassion and the ability to do the seemingly impossible?

Happy St. Patrick’s Day! Today, everyone has a little bit of Irish heritage and will chase the clever Leprechaun to find fortune. Bankruptcy is a debtor’s pot o’ gold. Getting rid of bills and eliminating the pain-staking minimum payments every month is like finding the end of the rainbow. All of a sudden, the $700 per month you are spending on credit card payments can go toward a new green shirt or an ice-cold Guinness. Today, enjoy the warm weather and consider a bankruptcy attorney your lucky charm.

It’s 8:01 a.m. You’re trying to get the kids out the door and get a semblance of yourself for the meeting you have at work. Then the phone rings – it’s a creditor. The FTC guidelines state creditors are not allowed to call you before 8:00 in the morning or after 9:00 at night. So of course your creditor waits the extra minute to adhere to guidelines. Creditors do have rights to collect on debt but some take collection to the extreme. It is important to know your rights as a consumer. Number one being – file a bankruptcy and the calls must stop.

While you work on deciding if you want to struggle with debt or feel the relief of being debt-free, below are a list of things your debt collections cannot do from the Federal Trade Commission.

Harassment

Your collectors cannot threaten you with violence or harm. Despite what some of your creditors tell you they cannot publish a list with your name because you refuse to pay your debt. However, your creditors can send the information to the credit bureaus. The harassment of constant phone calls will stop with a filed bankruptcy. A meeting with an attorney will not stop the calls – you need a petition filed with your local bankruptcy court.

False Statements

Your creditors cannot pretend they are:

- Attorneys or government officials

- Police stating you committed a crime

- Representative from a credit reporting agency

Your creditors cannot say:

- You will be arrested for not paying your debt

- They will seize, garnish, and repossess your personal property or income unless they have a court order.

Your creditors may not:

- Give incorrect credit information about you to anyone including a credit reporting agency.

- Send you anything that looks like an official court document if it isn’t.

- Use a false company name.

Unfair Practices

Your debt collectors cannot do the following to receive payment on the debt:

- Try to collect any interest or penalty unless the contract (that you signed originally) allows

- Deposit a post-dated check early

- Take or threaten to take personal property unless court-ordered

- Contact you by postcard

To read about additional debt collection rules, please visit the FTC’s Web site here.

Increases in taxes, expenses and minimums, increases in taxes, expenses and minimums – oh my! Like the mysterious world of Oz, the current financial situation of the average debtor seems to be as confusing as to why Dorothy wore red glittery shoes in windblown Kansas. Like the veil being pulled off the wonderful wizard of Oz, the sheath of financial naiveté needs to be yanked off.

There are vague percentages about increases and decreases being tossed around in various newspapers addressing how the economy is bouncing back. Maybe, but it seems like the rich are getting richer and the middle class are joining the poor. Pardon my criticism but how is the economy bouncing back when the Illinois legislature approved a 66% income tax increase? A percentage of the population may be returning to work, but paychecks are being spent on taxes, increased living expenses, and unbelievable interest rates and minimum payments.

Income taxes went up 66 percent in Illinois to attempt to balance the state budget. The average median income for a single person in Illinois is $46,355. Currently, this single person is paying $1,330.65 in income taxes. With the income tax increase, the person will now pay $2,222.19 in income taxes. That is $891.54 more! If you have a tight budget as is, the bigger deduction from your check is not going to help anything. For your average single working person, the economy is not good – especially if you have debt.

Think about it, if you are paying a $500 minimum payment toward your credit card every month, the tax increase eats up your minimum payment and then some. Filing a bankruptcy does not mean the tax hike will disappear but at least you’ll be debt free to rebudget and afford things like food, water and gas.

Living expenses continue to increase particularly gas prices. You need gas to fuel the car to get to work but you have to pick up extra shifts to be able to afford the gas. According to a survey, the average distance for a commuter in Illinois is 16 miles and when gas prices are expected to climb up to $4.00+ by summer, gas for a 32 mile round-trip add up. Jobs may be available (according to ads in the Chicago Tribune) but a person returning to work has to pay to get there. There is no money left over to pay minimum payments after fueling up.

Lions and tigers and minimums – oh my! When you have a significant amount of debt, making minimum payments on $10,000 worth of debt is really not going to get you anywhere. The minimum payments go primarily to interest not to the principal. If you struggling to make the minimum, an increase in interest or the payment itself can throw an already tight budget out of whack. File a Chapter 7 bankruptcy to eliminate the debt or a Chapter 13 which will eliminate interest.

For example, a statement provided by an Illinois debtor for a payday loan store showed an original loan amount of $6,065.00. This loan had an APR of 300% and the debtor will pay a total of $9,105.79 by the end of the loan. This person should file a bankruptcy and feel free to dance down the sidewalk singing, “ding dong the witch is dead.”

Follow the yellow brick road to financial freedom. Take some time and actually look at your credit card statements and see how your payment is broken up. If you are an Illinois resident visit this site to calculate how much the tax increase will affect your monthly budget. As for now, the economy doesn’t seem to be getting much better. Click your heels together and investigate your bankruptcy options.

Earlier this week, there was an article on MSNBC’s Web site addressing how bankruptcy can save your home.  This is a national news service advertising the numerous benefits of a bankruptcy.  In the article, journalist John W. Schoen said, “Bankruptcy laws, after all, were established to provide an orderly process for people in financial trouble to reorganize their debts, start fresh and rebuild their lives.”

 

Schoen’s article focused how a Chapter 13 bankruptcy can save homes from foreclosure. Homeowners who were out of work for a couple of months and are getting back with a steady income can save their homes. If you can afford your home, you can keep your home. Let me repeat, if you can afford your home, you can keep your home. File a Chapter 13 bankruptcy and stop the foreclosure proceedings. 

 

If you every tried contacting your mortgage company about a missed payment or modifying a loan, you are well aware that stopping a foreclosure without a Chapter 13 is nearly impossible.  Most mortgage companies will not accept payments once a foreclosure has been filed – even if you have money to pay on the arrears. A chapter 13 is your solution! Your mortgage company cannot proceed with a foreclosure if you have a filed Chapter 13 bankruptcy.

 

I am not a statistician but I think you can link the increase of bankruptcy filings and the decrease in foreclosures. For example, in Illinois in February, there were 109,178 bankruptcy filings. This number can be attributed to using tax refunds to pay for bankruptcy filings and other numerous causes for the jump from January. However, the number of foreclosures in Illinois also declined. According to RealtyTrac, there were 9,592 foreclosure filings. This number is 45% lower than February of last year.  So more bankruptcies were filed and fewer foreclosures were filed – coincidence? I think not.

 

It’s hard to argue the numbers are not related. The negative stigma of bankruptcy is being replaced by the benefits to struggling consumers. Articles like Schoen’s can replace the negativity around bankruptcy. The ongoing joke is if you walk into a party and say you filed for a bankruptcy, half of the room would say they filed also. Everyone needs a little help especially when it comes to your home. Just a reminder, if you can afford your home, you can keep your home – examine your Chapter 13 options.

To read the article click here

It will be close to 50 degrees in the Chicago area today and it's a glimmer of hope - spring is on its way.  The warm weather means people emerge from hibernation and spend time outside. In Chicago, the path along Lake Shore Drive fills with joggers, bikers, rollerbladers and the general passerbys. Spring turns into summer and instead of fidgeting with bills, lawsuit summons, and the endless stream of creditor calls, I would rather join the careless joggers on Lake Shore Drive. Spring clean your debt just like you spring clean the dreaded hall closet.

Filing a bankruptcy is the ultimate spring cleaning. Think about it, you file a Chapter 7 bankruptcy now - wait the 60-90 days for your discharge and you could be debt-free by June! It's a big decision to make but when you actually look at your bills, your budget and your income - what else are you going to do? You can waste another wonderful spring day doing balance transfers or barely meeting minimum payments or you can contact a bankruptcy attorney and get out of debt.

I understand a person is not going to be convinced to file a bankruptcy overnight. It actually takes the average family 2 years of fighting creditors to actually make the decision to file a bankruptcy. But look at the numbers, why torment yourself for the next 30+ years when you could file a bankruptcy and actually enjoy some relief (and a sunny afternoon). Plug your numbers in to Bankrate if you want to see how much you are actually spending on minimum payments.

Get yourself out of debt. Throw away the stress and hassle like you throw away old dusty brooms from the hall closet.

You finally decide to file a bankruptcy. Now, you want to find a bankruptcy attorney and you assume since your filing for bankruptcy the cheapest attorney is the best attorney. Wrong! A cheap attorney will ultimately cost you more fees than the original quoted price. Think about it, why pay a no-name attorney when you’re dealing with your finances and ultimately your financial future? Experience counts, especially when you’re dealing with cherished items like your house, car, and other personal property.

You can find cheap attorneys, they do exist. Look in your local phone book and find the one advertising $400 bankruptcy. The ad is probably next to a used-car ad offering financing for everyone and no credit checks.  Use your head and the age old phrase - you get what you pay for. You fall for the ad and it's easy to do so - you’re vulnerable because of your financial situation and the cheap attorneys talk a good game. But don't let common sense fall victim to the cheap attorney. You're filing a bankruptcy use the opportunity to make better financial decisions.

When hiring any attorney, the first question you should ask is, "how long have you been practicing?" The longer the better - the more skilled attorneys are the ones who have been around and are capable of handling anything that comes up. It's not just the attorney you meet with but the law firm you work for. If you are hiring a sole practioner, there is only one set of eyes and one legal mind reviewing your case. The best writers in the world have their masterpieces reviewed and then reviewed and so on... Instead you hire an attorney at Geraci Law, LLC. You have multiple attorneys reviewing your case to make sure you keep what you want to keep and eliminate your debt.

Cheaper is not always better. Ask owners of the Ford Pinto....

Below is a list of rules created (and enforced) by the Federal Trade Commission (FTC) for debt settlement or debt relief. If you are currently enrolled in a debt relief program, look at the list maybe the agency you hired isn't meeting the standards. Filing a bankruptcy can eliminate your debt or you can file a Chapter 13 repayment plan through the court. A bankruptcy works within the law to provide you with a fresh start. Attorneys have an ethical obligation to do what’s best for their clients and you have the bankruptcy code on your side.

In 2010, the FTC amended the Telemarketing Sales Rule to prohibit debt relief firms from collecting fees before certain guidelines are met. An organization offering to settle a debt for a fee cannot collect said fee until the following guidelines are met:

- The debt relief service successfully settles or changes the terms of at least one of the consumer's debts

- There is a settlement agreement debt management plan, or other agreement between the consumer and the creditors that the consumer has agreed to; and 

- The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.

Information courtesy of the FTC

Many of these organizations require debtors to have a "dedicated account" to put in funds to pay creditors. The Better Business Bureau (BBB) has received numerous complaints regarding access to these funds. To have a dedicated account the organization must meet the following guidelines:

- the account is maintained at an insured financial institution

- the consumer owns the funds including any interest

- the consumer can withdraw from the debt relief service at any time without penalty and will receive all unearned fees within 7 business days 

- the provider is not affiliated with the bank nor receives referral fees.

Information courtesy of the FTC

Now you have some of the regulations for a debt relief agency. The reality is the majority of agencies do not meet these guidelines. In a study done by the FTC, only 10 percent of consumers in a debt relief agency actually succeed despite the majority of advertisements claiming 100% success rates. Knowledge is power - if it sounds too good to be true, it probably is.

There is a great article called "Knee Deep in Debt" on the FTC's Web site. To read the article, click here.

Apparently everyone is having money trouble. Our elected officials are having as difficult of a time as you or I creating and maintaining a budget. The big difference is when the federal government can't create a budget, the government stops.  Federal employees do not go to work because there potentially is no money to pay them.  Despite a budget extension to March 18th, the federal government is hitting the bomb shelter and preparing for a shutdown, including the federal courts.

When there is a shutdown, the costs charged with almost every filed bankruptcy petition can actually fund the adminstration of the majority of courts - not just the bankruptcy court. However, the funds could simply run out. The money spent by bankruptcy petitioners is actually funding other courts...the irony.

If the court were to shutdown and if the pool of money from court costs were to dry up, it is possibly bankruptcy attorneys could be affected. If there is no money to fund PACER (an electronic filing system used by attorneys to process bankruptcy petitions - including Geraci Law, LLC), the system could be shut down.

What does this mean to you - potential bankruptcy filer? You want an attorney who can survive the shutdown! Peter Francis Geraci and Geraci Law, LLC have been in practice for the last 35 years.  When there were other government shutdowns in the mid-90s, the firm survived and ensured petitions were filed.  

When you are considering a bankruptcy, keep in mind our towns, our states, and our federal governments are in similar positions. There is simply no money left over at the end of the month to pay the bills.

The rumors circle around the water cooler, a supervisor says hours will be cut, and a couple of months later the dreaded e-mail comes out saying you're losing your job. Unemployment is scary especially when you have debt. When you live paycheck to paycheck, the loss of that paycheck and a chunk of your income is a big hit. Filing a bankruptcy to eliminate the debt can alleviate the loss. Think about it, getting rid of the credit card or medical debt can free up your income so when the first unemployment check comes in it doesn't have to go directly to interest. Instead the money can go toward your mortgage, your vehicle, and things like gas to fuel the inevitable job hunt.

The job hunt becomes a full-time job - you are constantly applying for jobs, updating resumes and trying to get back on your feet. While you are dealing with the stress of job loss, the last thing you need is a creditor calling demanding payment or they will take your dog from your front yard (true creditor story).  When you're on unemployment, it becomes close to impossible to maintain credit card payments with high interest rates and minimum payments. Since we are currently in a "buyers market" when it comes to employment, employers are looking closely at credit reports to weed out potential employees. If you miss a couple of payments or have serious negative information on your credit report, it could be enough to be denied a job.

In an interview with the Dallas Morning News, attorney Mark Shank said there's no federal law that prohibits employment denial because of a bad credit report or score. When you have a tremendous amount of debt to the point where the negative information column on your credit report is starting to look as long as War and Peace, it's time to consider other options. You file a bankruptcy, eliminate the debt, and post-bankruptcy make your payments on time, put some money aside and rebuild.

Will it help you get a job? There's no way of knowing. But you'll be debt free so you can continue the job hunt and actually be able to answer your phone without the fear of being berated by a creditor.

The word bankruptcy has been in the news recently. However, the discussion is not directed toward consumers but state bankruptcies. With budgets spread so thin that the state budget seam is about to burst, a state bankruptcy is an interesting idea.

States are in fact, well bankrupt. With budget shortfalls and empty pension accounts, the inevitability of federal bailout request is obvious. It's an opportunity to lay out the current financial situation and plan for a better future. Walt Disney did it, Abe Lincoln did it, General Motors recently did it and their stock is making a comeback. Allowing states the option to file would address the problem and allow provide a solution.  Instead, governors are against the idea of state filing and have expressed some genuine concerns but have failed to come up with a better solution.  Illinois lawmakers decided it would be better to raise the income tax 66%.

This is the same state according to Governor Pat Quinn in a budget speech said, "Currently, Illinois pays its bills six to eight months behind schedule." If a consumer with a payment six to eight months behind did not address the problem, it's probable they would be sued, garnished and constantly harassed by creditors. Generally, the consumer may only have $10,000 in debt not the $8.7 billion of Illinois.

There are worries, concerns, and angst with any major financial situation. And while the majority of this entry is hypothetical because the legislation has not been passed - the idea of a state bankruptcy may not be as "havoc reeking" as some lawmakers have inferred.  Consumer bankruptcies have provided help for so many families why not extend the aid to the states. Be as brave as the constituents you represent lawmakers, give the option of state bankruptcy another look.

 

Continuing Attorney Curtis entry, "Selecting the Right Bankruptcy Attorney for You - Experience Counts," the right attorney is one who will file your case in a timely matter and correctly the first time. When the economy turned, attorneys who file bankruptcy are appearing like campaign ads in November. These attorneys are ones who quote $400 bankruptcy fee and disappear after the case is filed. You know the saying you get what you pay for.

Recently, two Illinois bankruptcy attorneys have been charged with several counts of bankruptcy fraud. Including lying under oath, filing false documents, and hiding case dismissals from clients. This attorney also allegeldy collected fees to file for Chapter 13 bankruptcy protection with the promise to put the money toward the mortgage. However, the court alleges they used the money for their own benefits. When it comes to your financial situation you want an attorney to file your case correctly - and legally - so you are not paying an attorney to get you further in the hole.

When considering an attorney, it is important to look ahead to the future. A Chapter 13 bankruptcy can range anywhere from three to five years meaning you want to know your attorney will be around for the next three to five years. Peter Francis Geraci and his firm have been practicing for 35+ years helping numerous people get out of debt. When a previous client calls needing a reprint of bankruptcy information, a person answers the phone instead of a dial tone for attorneys who have closed up shop.

You can read more about the indictment in today's Chicago Sun Times.  

You file a bankruptcy, your debt is eliminated and now what? Being debt-free is a great thing and you want to rebuild your credit but maybe you don't know how? Post-bankruptcy brings credit cards and financing options but with higher interest rates. Creditors want you to be in debt - if you apply for one of these credit cards and get overwhelmed again, the safety net of a Chapter 7 bankruptcy is not an option again for eight years.  It is easier said then done to create a budget and save money. Many people are not educated in handling finances and bankruptcy can eliminate the old debt but to manage future debt they need the tools to succeed.

When the bankruptcy laws changed in 2005, certification of credit counseling and debt management became mandatory for a case to filed and a case to be discharged. The debtor is required to spend time learning financial management to receive his certification. The credit counseling course focuses on reasons a person gets into debt and possible solutions. So, a person filing for a bankruptcy completes the course and can identify possible reasons as to how they got into debt in the first place. The debtor education course outlines short term and long term goals along with creating a budget so post-bankruptcy, the debtor has background in financial management.

The courses are important. The majority of bankruptcies are filed due to factors like divorce and medical problems.  But, there are people who used credit and were possibly not educated in the ramifications of missed payments, high interest, etc. For a person who is overwhelmed by their debt, these courses can provide the tools for a better financial future.

According to an article by Julie Schmit of USA Today, the average forecloure time takes 17 months - this number is up from 11 months from two years ago. Job loss is the leading cause of foreclosure for homeowners and the common misconception is you will lose your home when you are only a few months behind. The best, easiest, and probably the cheapest way to save your home is by filing a Chapter 13 bankruptcy. A Chapter 13 repayment plan will STOP foreclosure proceedings and you will enter a repayment plan with the bankruptcy court for the arrears on your home and debt without the interest and penalties.

Think about it - you lose your job in March and fall behind on the mortgage, you have a new job starting in June and would be able to make the mortgage payment but not all the arrears at once. While on unemployment you can't afford to make your mortgage payment and the house goes into foreclosure before the new job starts.  Solution - file a Chapter 13 bankruptcy! Your income at the new job will be more than enough to cover your mortgage payment and you will pay a small additional amount to cover the arrears in a three to five year repayment. The foreclosure proceedings stop and you are able to stay in your home.

A chapter 13 can be filed the same day as a sheriff sale in order to stop the auction of your home. Do not wait that long, if you fall behind and can afford your home then get a case filed. Sooner is always better than later - especially if you are behind on your home.  If a foreclosure takes over a year to complete, it is more time for you to save your home but the quicker you file the faster you can become current on your mortgage payment.

The opposite side is if you want to walk away from your home. If you have unsecured debt that you know you won't be able to pay off and a mortgage that doubles your monthly income - filing a Chapter 7 bankruptcy is a good way to get a fresh start. A Chapter 7 bankruptcy will eliminate the credit card debt and your obligation to pay the mortgage deficiency. If foreclosure takes 17 months to complete, you can file a Chapter 7 and eliminate the credit card debt and stay in your home until the sheriff sale. It's rent free! Just keep the property insured and maintained and you can save money until the end of the foreclosure.

Read Julie Schmit's article in USA Today at http://www.usatoday.com/money/economy/housing/2011-02-21-unpaidmortgages21_ST_N.htm

 

Will it ruin my credit?

- You probably don’t have great credit now! Filing a bankruptcy can eliminate your debt and provide you with the opportunity to rebuild your credit. Even if you have a 700+ credit score, having too much credit is not good credit.

 

Will I lose my house?

- Not if you don’t want to. To keep your house, you must stay current with your mortgage payments. The attorney you meet with will determine which bankruptcy will allow you to keep your home. Geraci Law has not lost a house in over 35 years and doesn't want to start with yours.

 

Do I have to include all of my credit cards?

- You cannot pick and choose your debt and why would you want to? Filing a bankruptcy can eliminate all of your debt giving you an opportunity for a fresh start.   

 

Can I keep my boat/motorcycle/rocket ship?

- You can keep your assets if you can afford to keep them. The attorney you meet with will determine which bankruptcy will protect all of your assets.

 

Do I have to be behind on my bills to file for bankruptcy?

 

- No! You can be up to date with the minimum payments and still have a tremendous amount of debt. Making the minimum payments is probably not getting your anywhere close to being debt free. For example, if you have $2,500 in credit card debt with 21% APR and you are only making the minimum payment – it will take you 40 years and 8 months to pay back the original charge of $2,500!

 

How much is it going to cost?

- Going and meeting with an attorney is like going to the doctor. A lawyer like a doctor needs to diagnose what the problem is and assess the amount of work to be done to fix the problem. After filling out our forms and meeting with a lawyer, your fee will be quoted to you. Our fees can be done in payment plans and will be based on your case and your financial situation.

 

I talk to people all day, every day. People who by overspending, medical issues, divorce, etc. have found themselves in a hole they can't dig themselves out of.  Knowing they are in fact "buried" there is still hesitation to filing a bankruptcy. Somehow, bankruptcy has been dubbed the end all, be all to your financial future. The somehow could be answered with the boisterous words of people like Sue Orman. In an interview with "Us Money Talk" she said bankruptcy is the worst choice to make and it will have a negative impact on a credit score. Obviously, Ms. Orman! Applying for too much credit, multiple inquires into a person's credit, debt settlement and missed payments can also have a negative impact. 

Orman's brilliant solution is creating a budget with a credit counseling agency. Sure, credit counseling with a non-profit, legitimate agency can help people budget and plan for their future. BUT - how does it help when you have $50,000 in credit card with 30% APR. There's a negative impact on a budget, if a person can't meet the minimum payments due to a job loss, income reduction, etc. how will budgeting with a loss of income help plan for their financial future. 

A person with $50,000 in credit card debt at 30% APR is looking at a minimum payment of $1,725.00 per month and it will take the person 525 months to pay off the debt! That's over 43 years and the person will pay $124,263.52 in interest! Instead the person files a Chapter 7 bankruptcy, eliminates the debt and the money spent on minimum payments is allocated to their financial future. If a person is so overwhelmed by their debt, with interest rates and minimum payments skyrocketing, debt settlement and budget planning are a Band Aid for a massive debt wound.

Orman and others like her ignore the real numbers and consider one of the country's oldest laws the worst option for struggling people. Why spend thousands upon thousands of dollars in interest, lose sleepless nights from stress and still have Orman's "negative impact" on your credit when you can file a bankruptcy and be debt free!