Q&A with a Chicago Bankruptcy Attorney–Borrowing from a 401(k)

Q:      My wife and I are in our late 20s with a mortgage and almost $20,000 in student loan debt between the two of us. We each have 401(k) plans we have contributed to-should we cash one out to pay off student loan debts?

A:      It may be very tempting to cash out a 401(k) to pay off any debt, including student loans and mortgages, but it is probably not in your best interests for your long-term financial security. If you do withdraw money from the 401(k) early, you will have to pay a 10 percent penalty on whatever you withdraw in addition to your tax rate. Hypothetically, if you make more than $75,000 annually, you will pay your 25 percent tax rate in addition to the 10 percent penalty. If someone tried to get you to sign off on a loan at 35 percent interest to pay off the student loan, you would think that person was out of his mind.

People who have large student loan debt on top of other debt may want to look at bankruptcy get rid of dischargeable debt and focus on paying back the student loan debt, which is rarely dischargeable in bankruptcy. Contact or firm for more bankruptcy information .

Benjamin Brand Services- Chicago bankruptcy lawyer .

Chicago Bankruptcy Attorney Evaluates Options for Student Loan Debt

Student loan debt was been soaring for the last decade and a half, and many economic experts believe it could hinder a recovering economy. Student loan debt has increased by almost 500 percent since 1999, and in 2010 student loan debt in the United States surpassed credit card debt for the first time. Some analysts predict the total student loan debt in America to be in excess of $1 trillion.

Student loan debt is not dischargeable in bankruptcy unless the borrower can prove extreme hardship endured by the borrower. Exceptions are rare. Illinois Senator Dick Durbin has proposed some solutions to the possible pending crisis, including bankruptcy protection for borrowers of private student loans. U.S. Representative Hansen Clarke (D-MI) introduced the Student Loan Forgiveness Act of 2012, which would allow borrowers to receive partial loan forgiveness. Under this proposed act, debtors can pay 10 percent of their income to their loans for 10 years; after that, the rest of the debt can be forgiven. Even more forgiveness incentives are available to graduates who choose a career in public services, such as firefighters or teachers.

These are some interesting options for the looming student loan debt crisis. This is a problem that must be addressed, but borrowers should not count on being able to discharge student loan debt in bankruptcy. If you are struggling with debt you may want to consider bankruptcy to discharge other debts so you are able to pay back your student loans. Visit our website for more bankruptcy information .

Benjamin Brand Services- Chicago bankruptcy lawyer .

Chicago Bankruptcy Attorney Critical of Hostess’s Business Practices

Hostess Brands, Inc. filed a bankruptcy motion seeking permission to close business and sell its assets in a high profile case in November, which was accepted by the United States Bankruptcy Court for the Southern District of New York. However, the actions and financial decisions by Hostess executives have been brought to light and some former workers are not happy.

Many Hostess employees lost their entire pension while assets were being sold off, and it was recently revealed that the judge allowed Hostess to use $1.75 million to pay bonuses to 19 executives. The act didn’t necessarily violate any federal laws because Hostess didn’t take money out of employees pensions, but rather failed to put money into their pensions without telling them.

“It’s what lawyers call betrayal without remedy,” attorney James P. Baker told reporters-Baker is not involved in the Hostess case, but he specializes in employee benefits. “It’s sad, but that stuff does happen, unfortunately.”

Some of Hostess’ creditors accused the company of raising and manipulating the salaries of executives in an attempt get around bankruptcy laws. The real victims are the employees who lost their pensions and will be struggling through hard times as a result.

Please visit our site for more bankruptcy information .

Benjamin Brand Services- Chicago bankruptcy lawyer .

Chicago Bankruptcy Lawyer Reflects on Detroit Financial Crisis

Detroit has been in a financial slump for many years now, and the effects have been felt by public officials, business owners and certainly laid off workers. Some experts predict that Detroit may become the first major American metropolis to file a Chapter 9 municipal bankruptcy.

As Detroit has faced hundreds of millions of dollars in bills, the city has continued to cut back on public services. Detroit is battling claims and lawsuits from creditors, city worker unions and retirees. The repercussions are being felt throughout the city as there are fewer police officers and firefighters available.

It is possible that a federal bankruptcy judge could permit Detroit to renegotiate labor contracts or even nullify them.

“It’s a situation of ‘Be careful what you wish for,'” says John Pottow, a professor at the University of Michigan Law School. “The judges are much more involved. They’re reflecting an amenability to serious labor cuts, and I think that’s surprising to a lot of people who didn’t think they’d do much in bankruptcy. We are in a new era of Chapter 9 and using it in new ways. It’s an unknown, uncharted and unpredictable process.”

These cuts to unions and other programs may cause Detroit citizens to struggle with their own debt as government programs they rely on dry up. Please visit our site for more bankruptcy information .

Benjamin Brand Services- Chicago bankruptcy attorney .

Chicago Bankruptcy Lawyer Supports Senator-Elect Warren

Early reports indicate that Massachusetts Senator-Elect Elizabeth Warren is expected to be granted a seat on the Senate Banking Committee. Warren, a Harvard bankruptcy professor, is a consumer advocate who is has consistently been outspoken about big banks’ and credit card companies’ exploitative tactics.

If appointed, Warren will have a hand in re-writing the Dodd-Frank Act as well as other significant financial legislation pieces. A final decision on the Senate Banking Committee appointments will not be made until the new session of Congress convenes.

“We certainly plan to reach out to Senator-Elect Warren,” said James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association. “That outreach will stretch beyond Dodd-Frank reforms, which is the corner many will try to paint her into.”

It is great that a consumer advocate like Senator-Elect Warren will be appointed to such a prestigious position. Her experience and passion for fighting for the middle class will be a fresh of breath air for Congress.

Please visit our site for more bankruptcy information , and contact our firm for a free consultation.

Benjamin Brand Services- Chicago bankruptcy attorney .

Chicago Bankruptcy Attorney Appalled at Creditor Harassment

Creditors are notorious for their borderline harassing collection methods, particularly the big banks. The lengths that some of these banks go to collect is often unethical and sometimes illegal. One individual went through a particularly outrageous nightmare with Bank of America after his mother passed away, and he told his story to Consumerist.com.

Matt, who is still a college student, had to deal with the devastating loss of his mother on October 1. After she passed, Matt went through the process of notifying credit card companies, utilities, etc., while still grieving. Matt had to call Bank of America regarding his mother’s mortgage, which proved to be much more difficult than one would expect.

“The first call ended after the associate we are speaking to told us that the only person they could talk to was the person who was listed on the mortgage:  my mother,” Matt said. “Since she was deceased, that’s obviously not possible, so we explained ‘death’ to the person we were speaking to. They said they had to talk to my mother, we decided it was hopeless, and gave up.”

Matt sent in a copy of the death certificate, but continued to get daily harassing phone calls approximately once per hour. Matt told the Consumerist he sent the certificate in a total of six times and the calls continued for eight weeks.

It is outrageous that a young man had to deal with this creditor harassment while worrying about his school work and grieving his mother’s death. Please contact our firm for more bankruptcy information if you are being harassed by creditors.

Benjamin Brand Services- Chicago bankruptcy attorney .

What Does Elizabeth Warren Appointment to Banking Committee Mean for Chicago Bankruptcy?

Elizabeth Warren (D) won the Massachusetts Senator election race over Republican incumbent Scott Brown in November, and many believe she would be a natural fit for the powerful Senate banking committee. Warren is an American bankruptcy law expert and a Harvard Law School professor. Warren certainly has outstanding credentials-she was named the 2009 Boston Globe’s Bostonian of the Year, and she was listed in Time Magazine’s 100 Most Influential People in the World in 2009 and 2010.

Warren has a reputation for being a consumer advocate, standing up to banks and credit card companies. Warren is the first female senator in Massachusetts’ history.

Many big banks are not fans of Warren and her policies. Warren is certainly qualified, and most believe that if she wants to serve on the committee she will be named to it.

“The leadership and committee chairmen usually work together to try to accommodate incoming senators’ preferences, within reason,” one Senate Democratic aide told Reuters. “If Senator-Elect Warren indicates she’d like to serve on the banking committee, given her prominent work on those issues, she would certainly have a very good shot.”

It is hard to speculate exactly what it would mean if Warren is named to the committee, but most experts believe she would continue to be a consumer advocate.

Please visit our site for bankruptcy information , and contact our firm for a free consultation.

Benjamin Brand Services- Chicago bankruptcy attorney .

Home Sales Increase While Prices Decrease

Home sales for the Chicago area rose 27.6 percent to 7,187 homes sold, while the median price of $176,500 was a 10.4 percent decline from the $197,000 recorded in August 2010, the Chicago Tribune reported on September 21, 2011. A report from the Illinois Association of Realtors also showed that 1,787 homes were sold in August within the city of Chicago, up 20.3 percent from a year ago.

The Tribune also noted that Chicago condo sales increased 22 percent to 1,027 units sold but the  $242,500 median price of those units was a 10.5 percent drop from the $271,000 price one year ago. Every county in the Chicago area had double-digit sales increases in August compared with one year prior, but sales for the year to date remain negative. The Tribune also noted that a survey of 111 economists and real estate experts conducted for MacroMarkets LLC showed “downward pressure on home prices is expected to continue and could mean a decade-long poor showing for the housing market.”

If you are fighting to stay in a home that is worth less than it was when you bought it, our Chicago bankruptcy lawyers can help. Many Chicagoans and multiple families all over Illinois are struggling through hard times, but our firm can supply you with all of the bankruptcy information you will need to eliminate bills and stop foreclosure. A bankruptcy means test can go a long way toward helping end creditor harassment, but before you can file Chapter 13 or Chapter 7 , you need to contact our office first in order to set up a free initial consultation that will help you get started on becoming debt free and credit rich.

Benjamin Brand Services – Chicago bankruptcy attorneys

Chicago Home Prices Rise For Month

Chicago led the way of eight cities posting month-to-month gains in a June report from the Case-Schiller Home Price index. While Zacks.com reported on August 30, 2011, that Chicago rose 1.32 percent for the month-to-month, it was also one of five hardest-hit metropolitan areas in year-over-year declines with those numbers down 7.49 percent.

The Chicago Tribune reported on August 30, 2011, that a majority of the monthly improvement in the Chicago area came from the 6.5 percent price increase between May and June in homes that sold for less than $162,138. Homes sold for more than $275,128 rose 2.9 percent, while houses sold for between $162,138 and $275,128 appreciated 1.8 percent.

The Tribune also noted that the condominium market in the Chicago area saw improved sales prices for the fourth straight month, with values increasing 4.3 percent from May to June. Zacks.com added that while the Case-Schiller data is the “gold standard for housing pricing information,” it is better to look at the seasonally adjusted numbers for three-month moving average. The most recent report, for example, includes data from April and March.

If you are still facing foreclosure in your own housing situation and have been considering a short sale or bankruptcy as options, contact our Chicago bankruptcy information law firm today for a free initial consultation.

Benjamin Brand Services – Chicago bankruptcy attorneys

$16 Million In Foreclosure Funds Still Available

There are 1,944 former property owners who are entitled to a share of $16 million in foreclosure surplus funds due them, the Chicago Tribune reported on August 25, 2011. The office of the Cook County Clerk of the Circuit Court still has the sum sitting in an interest-bearing account two years after unveiling a search engine for former property owners to determine if they were entitled to those funds. The Tribune reported that now the office is teaming up with other county and state agencies to increase awareness.

The goal of the Mortgage Foreclosure Surplus Fund Task Force, for instance, is to “encourage residential and commercial property owners who lost their real estate to foreclosure to check on their cases, even if they go back to the late 1990s.” The Tribune noted that if a foreclosed property was “resold at a court-ordered auction for more than the amount due on the mortgage,” state law requires that the original property owner is entitled to receive any surplus amount of more than $100.

While one person is due funds as high as $450,000 on one commercial property, the average surplus is $2,000, according to the Tribune. There is no time limit for when people have to apply for the funds.

If you are struggling through hard times and need foreclosure help today, you have many options available to you to try to keep your home and catch up on your mortgage. Contact our Chicago bankruptcy lawyers to obtain important bankruptcy information. Bankruptcy could save your home.

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