Tuesday, October 10, 2017

Credit Report Changes for Chapter 13 Bankruptcy Filers

If you file for Chapter 13 bankruptcy, how long does information about that consumer bankruptcy remain on your credit report? According to a recent article in ProPublica, for most consumers who look at their TransUnion and Experian credit reports, they will find that the credit reporting agencies report Chapter 13 bankruptcies for seven years. However, Equifax had been reporting consumers’ Chapter 13 bankruptcies for a longer period of time. Indeed, “hundreds of thousands of people who had filed for bankruptcy under Chapter 13” discovered that their history of bankruptcy remained on their credit report for 10 years if they failed to complete their bankruptcy plans.
The good news is that Equifax has changed this policy, but it is not yet clear how many consumers have been affected. If you filed for Chapter 13 bankruptcy more than seven years ago and were denied credit, the denial may have been a result of Equifax’s policy. You should talk to a bankruptcy attorney in Oak Park.
Consumer Harms and Bankruptcy Reporting Policies
While filing for Chapter 13 bankruptcy may be able to help consumers to manage their debt and to get back on track financially, in the months and years immediately following a bankruptcy filing, it can be difficult to get approved for credit or to have other applications approved. As the ProPublica article clarifies, credit reporting agencies often underscore how “having a bankruptcy in your credit history will seriously affect your ability to obtain credit for as long as it remains on your report.”
In addition, as we mentioned, bankruptcy can affect your ability to have other types of applications approved. For instance, the article highlights, bankruptcy “can also affect your ability to qualify for things like an apartment, utilities, and even employment.” In some cases, car insurance rates can also increase after you file for bankruptcy. As such, most consumers wait to file certain types of applications or for major lines of credit until their bankruptcy history no longer appears on their credit report. As MyFICO.com explains, completed Chapter 13 bankruptcies are only supposed to remain on a credit report for seven years, while Chapter 7 bankruptcies can remain on your credit report for 10 years.
Why did Equifax Treat Chapter 13 Filers Differently?
For those consumers who completed their Chapter 13 repayment plans within five years of filing, Equifax did remove the bankruptcy “flag” from their credit report after seven years. However, for “those who were unable to complete their five years of payments and had their cases dismissed were saddled with a flag for three additional years.” According to ProPublica, Equifax did not have a clear rationale for this discrepancy.
How many consumers would have been affected? There are more people than you might think who file for Chapter 13 bankruptcy but do not complete the terms of the repayment plan. About 50% of Chapter 13 cases end up being dismissed, and that often happens when the filers are behind on their required payments. Those individuals who had their Chapter 13 cases dismissed were treated differently by Equifax than by Experian and TransUnion, the other two credit-reporting agencies. Further, many of those consumers may have applied for credit after seven years under the assumption that the bankruptcy would no longer be reported, only to learn that they were denied credit.
Do you have questions about filing for Chapter 13 bankruptcy? An experienced Oak Park consumer bankruptcy lawyer can help. Contact the Emerson Law Firm today to get started.
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Friday, October 6, 2017

Consumer Bankruptcy and Race in Chicago

Are there correlations between personal bankruptcy filings and the race of the individuals who file? On a related note, are there correlations among race, Chapter 7 bankruptcy filings, and Chapter 13 filings? According to a recent report in ProPublica, there is a clear racial disparity when it comes to consumers who are filing for bankruptcy and choosing between Chapter 7 and Chapter 13. Specifically, the report notes that black Americans choose to file under Chapter 13 more often, and fewer complete their repayment plans to have debts forgiven: “[O]nly 39 percent of Chapter 13 cases filed by debtors from majority black zip codes ultimately resulted in a discharge of debts. In contrast, 58 percent of the cases filed by debtor from majority white zip codes were discharged.”
This data speaks to bankruptcy trends nationwide, and even when other factors (such as income) are taken into account and controlled for, this disparity remains, according to the report. Where does Chicago fit into all of this? Following the ProPublica report mentioned above, a separate article discussed racial disparities in Chicago bankruptcies in particular.
Bankruptcy Trends in Chicago and the Role of Race
As that article explains, a majority of Americans outside the U.S. South tend to file for Chapter 7 bankruptcy when they are struggling with unmanageable debt. However, that trend is much different in Chicago. The ProPublica article describes Chicago as “one big geographic exception.” In Chicago, “Chapter 13 filing rates have been rising steeply in black areas.” In 2015 alone, there were more Chapter 13 filings in the U.S. Bankruptcy Court for the Northern District of Illinois than in “any other district in the country.” That district includes bankruptcies in Chicago.
Why are there so many more Chapter 13 filings in Chicago? The article contends that “almost exclusively fueling this rise are residents of the district’s black communities, where the rate of filings has doubled since 2009.” While the racial disparity in bankruptcy filings that exists in Chicago is prevalent elsewhere in the country, the article notes that “there’s hardly anywhere else in the country where the gap is quite so wide.” What is causing the disparity? There are, of course, underlying matters of structural racism, yet in more immediate terms, traffic tickets appear to play an important role.
How Chicago Traffic Tickets May be Linked to Rising Bankruptcy Rates
There are a lot of people in Chicago who have unpaid traffic tickets, and as those tickets go unpaid, many of those who have been cited have lost their driver’s licenses and/or had their motor vehicles impounded, preventing them from getting to work or working altogether. What is the link between unpaid traffic tickets and Chapter 13 filings? When you file for Chapter 13 bankruptcy, you can benefit from an automatic stay that may be able to prevent a creditor from seizing your car. Given the importance of transportation for working, many debtors with unpaid Chicago traffic tickets are turning to Chapter 13 for relief.
Yet many of those filers simply do not keep up with the payments that are required of the repayment plan, and as such, many end up having their vehicles seized or repossessed anyway while they fall deeper into debt.
Bankruptcy can be an important tool for consumers, but it is important to learn about your options and to choose the one that is right for you with the help of an Oak Park bankruptcy attorney. An advocate at our firm can speak with you today about the options that may be available to you. Contact the Emerson Law Firm for more information.
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Thursday, October 5, 2017

Consumers Struggle to Make Ends Meet and End Up in Debt

According to a recent news release from the Consumer Financial Protection Bureau (CFPB), about 40% of adults in the U.S. are struggling to make ends meet. In other words, a large percentage of Americans do not feel that they earn enough money each month to pay bills and to have the minimum money remaining for savings or for activities of daily living.
While avoiding bankruptcy can be beneficial for some consumers, for many debtors, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can provide a fresh start or a way to get back on track. To better help consumers to understand their financial well-being, the CFPB has created an interactive tool. When so many consumers are struggling with bills and debt, when is it time to begin thinking about personal bankruptcy?
CFPB Develops Interactive Tool to Help Consumers
Many consumers need help managing their finances and figuring out when their debt may be insurmountable. With about 40% of adults indicating that they are struggling, there is a need for debt management tools.
This information about consumer financial struggles comes from the National Financial Well-Being Survey, which the CFPB started conducting last year. According to the CFPB news release, “these survey results are beginning to measure and examine the financial well-being of consumers” to help them better understand financial management and how to get help if they are struggling with debt. That is where the interactive tool comes in. As CFPB Director Richard Cordray explains, “the new tool we are releasing allows consumers to measure their own financial well-being and helps them take better control of their financial futures.”
What is the tool? In short, it is based on the CFPB’s Financial Well-Being Scale, and it allows consumers to track their well-being over time as well as to compare themselves to other Americans based on income level, age, and employment status. In assessing their financial well-being through the tool, consumers can also access CFPB resources for meeting financial goals.
Need for More Analysis of Consumer Financial Well-Being
While the interactive tool may be able to help some consumers who are struggling with debt or to make monthly bill payments decide whether bankruptcy is right for them, the CFPB’s news release also raises an important question: Why are so many Americans struggling financially? Are there similar characteristics among those that report they have difficulty making ends meet? Here are some facts that the CFPB reported:
  • About 43% of consumers have difficulty finding the money to pay their bills;
  • 34% of American consumers report that they have experienced a material hardship in the last year (which includes not having enough food, not being able to afford housing, and not being able to afford medical treatment);
  • Financial well-being is linked to consumers’ education level, income level, and employment status;
  • Financial well-being tends to be higher for older adults; and
  • Younger adults aged 34 and under tend to have the lowest levels of financial well-being.
Do you have questions about debt management or filing for bankruptcy in the Chicago area? A dedicated Oak Park bankruptcy lawyer can speak with you today. Contact the Emerson Law Firm to learn more about how we can assist you.
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Thursday, September 28, 2017

Consumer Advocates Oppose Debt Collection Bill

Do you have concerns about fair debt collection and protections that are in place in Oak Park to help consumers who have been subject to fraudulent debt collection practices? According to a recent article in The Detroit News, a piece of proposed legislation by U.S. Rep. Dave Trott would amend the Fair Debt Collection Practices Act (FDCPA) in such a way that consumer advocates argue would harm debtors immensely. Indeed, “Drawing the ire of consumer groups,” the bill “would allow attorneys and law firms to sidestep federal law barring abusive debt-collection practices such as making false threats and pressuring people to pay debts they don’t actually owe.”
To be clear, the bill would exempt lawyers from liability in certain FDCPA violation cases. It is important for the FDCPA to be a law that Oak Park consumers know is there to protect them if they are harassed by a debt collector, or given misleading or fraudulent information. To better understand what this bill aims to do, we should take a closer look at it.
H.R. 1849 Would Exempt Parties from Liability in Debt Collection Lawsuits
The proposed legislation is H.R. 1849. The specific language in the bill describes its aims: “To amend the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of debt collector, to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes.”
To be clear, the bill seems to have two goals - to exempt lawyers from liability under the FDCPA and to prevent the Consumer Financial Protection Bureau (CFPB) from exercising supervision over or enforcement of lawyers engaged in debt collection cases. While the bill was proposed by a U.S. House member from Michigan, if it were to pass, its impact would be nationwide.
Should the CFPB be Able to Regulate Lawyers’ Actions in Debt Collection Matters?
Some commentators allege that Trott has proposed the legislation due to his personal experiences as a lawyer, including being “sued in federal court for alleged violations of the Fair Debt Collection Practices Act.” Given Trott’s professional experience as a lawyer in such matters, some contend that there is a conflict of interest.
Should the CFPB be able to supervise lawyers engaged in debt collection cases, or to enforce the FDCPA against lawyers more generally? According to one advocate, the amendments proposed by H.R. 1849 would prevent certain lawyers from being held accountable for “debt-collection ‘mills’—large legal practices that generate and file tens of thousands of debt collection cases a year.” Many consumers seek protections from practices of law firms engaging in debt collection just as they seek protections under the FDCPA from more specific debt collection companies.
Seek Advice from an Oak Park Consumer Protection Lawyer
If you have questions about your rights as a consumer or concerns about filing a claim under the FDCPA, an experienced Oak Park consumer protection lawyer can assist you. Contact the Emerson Law Firm today to speak with an experienced consumer advocate.
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Friday, September 22, 2017

Student Loan Creditor Must Stop Collections Due to False and Misleading Practices

Have you heard about allegations against National Collegiate Student Loan Trusts? Student borrowers with loans held by this creditor have made allegations about fraudulent lending and collection practices. In response to those complaints, the creditor settled with the Consumer Financial Protection Bureau (CFPB) for “nearly $19 million in penalties and borrower refunds,” according to a recent report in The New York Times. In addition, National Collegiate Student Loan Trusts “could be on the hook for millions in additional payments and forgiven loans.” And it is not the only entity that will be paying up. Transworld Systems, a debt collection company hired by National Collegiate, “will pay an additional $2.5 million.”
What are some of the harmful practices in which National Collegiate engaged? What can consumers do if they have been impacted by these allegedly false and misleading debt practices?
Filing Claims Against Consumers without Proof of Loan Documents
One of the major allegations against National Collegiate was that it “sued consumers for student loans they couldn’t prove were owed.” In other words, National Collegiate brought claims against consumers without having clear information about the debts those borrowers actually owed. In addition—and related to the first allegations—National Collegiate’s settlement addresses allegations that the creditor “filed false and misleading affidavits in courts across the country” related to collection practices.
In agreeing to a $19 million settlement, the creditor has also agreed to “set aside $3.5 million for refunds to 2,000 borrowers.” According to the report, the borrowers who may be eligible for a refund made payments on loans after they were sued by National Collegiate for debts that they were not required by law to pay. Generally speaking, there were two primary scenarios in which National College sued consumers and obtained payments that it should not have been able to collect:
  • Statute of limitations passed on the claim; and/or
  • Creditor lacked the proper documentation it needed to collect the debt through a lawsuit.
This is good news for consumers who know they were affected, and it may be good news for thousands of additional borrowers. To be sure, the CFPB will now be looking into approximately 800,000 more loans. It is possible that a lot more borrowers could be eligible for a refund.
Creditor Prohibited from Collecting on Certain Debts
While the CFPB is investigating National Collegiate’s practices with regard to all of its loans, the creditor will not be permitted to collect on any debts unless it can prove that the borrower actually owes the debt and that it is not a time-barred debt. As the report in The New York Times emphasizes, if National Collegiate has used false or misleading practices in attempting to collect on additional loans not covered by the recent settlement, it could end up paying a lot more than the total of $21 million for which it is already will be paying.
In addition to National Collegiate, the CFPB also issued a consent order against Transworld, a debt collector employed by National Collegiate. The Bureau alleged that the debt collector “falsely claimed personal knowledge of the accounts records and the consumer’s debt” in attempting to recover.
How can you know if you may be eligible for compensation from the settlement? If you have made payments on loans to National Collegiate, or have faced harmful debt collection practices by Transworld, you should speak with an Oak Park consumer protection lawyer as soon as possible. Contact the Emerson Law Firm today to get started.
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Thursday, September 21, 2017

Social Media and Personal Bankruptcy: What Do You Need to Know?

It might not sound immediately obvious that your social media activity could impact your personal bankruptcy case. However, it is important to think about the ways in which your image and your lifestyle are developed on sites like Facebook and Twitter, and to take care about how you present yourself when you are planning to file for bankruptcy. Specifically, when you file for consumer bankruptcy in Illinois, you will need to give the court information about your finances. If you fail to mention certain assets, you could be accused of bankruptcy fraud. If you are accused of bankruptcy fraud, not only can you risk losing the ability to seek a bankruptcy discharge, but you could also be charged with criminal offenses.
We will say more about how you should be careful on social media to ensure that your profiles do not negatively affect your bankruptcy. In the meantime, if you have questions about filing for consumer bankruptcy, you should speak with an Oak Park bankruptcy attorney.
Completing a Schedule of Assets and Liabilities When You File for Bankruptcy.
When you file for Chapter 7 bankruptcy, according to the U.S. Courts, you will need to file schedules of assets and liabilities, as well as a statement of financial affairs. What needs to go into these documents? The schedule of assets and liabilities needs to clarify any real property you own, as well as any personal property and property that you are claiming as exempt. You cannot leave out any assets (or liabilities) when you are filling out these required documents.
To be clear, you must provide the bankruptcy court with a full and complete listing of your assets, liabilities, and your financial affairs. This means listing every asset you own, and making clear when such assets are exempt. How can social media play a role in damaging your bankruptcy case? In short, if you fail to list an item you own, or if you are not honest in your statement of financial affairs, your social media accounts might provide evidence that could end up being used against you.
Popularity and Ubiquity of Social Media
You might think that your social media posts are private—especially when you use privacy settings—but the truth is, a lot of information that you post on Facebook and Twitter may be fair game when you file for bankruptcy. According to recent studies conducted by the Pew Research Center, about 70% of Americans currently use social media in some capacity. While young adults were the earliest users of social media sites, older adults have begun to post to sites such as Twitter, Instagram, and Facebook in recent years. 34% of people aged 65 and older use social media, and 64% of Americans between the ages of 50-64 use social media sites in some capacity. The most popular are Facebook, Pinterest, Instagram, LinkedIn, and Twitter.
If you are filing for bankruptcy, you should know that a bankruptcy trustee may browse your social media sites in order to look for any assets you might have failed to list on your schedule of assets and liabilities, or any signs that you have additional income that you did not report on a statement of financial affairs. For instance, of you are filing for bankruptcy and also taking a luxurious vacation, images from your trip may raise concerns with the bankruptcy trustee.
Contact an Oak Park Bankruptcy Lawyer
When you are thinking about filing for consumer bankruptcy, it is important to seek advice from an Oak Park bankruptcy lawyer. An advocate at the Emerson Law Firm can speak with you today about your case. Contact us for more information.
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