Sinking Incomes No Help for Underwater Homeowners

In discussing the thousands of Illinois homeowners needing foreclosure help throughout the week, we concluded on Wednesday by noting the benefits of filing Chapter 13 bankruptcy for homeowners who are underwater on their mortgages. However, we noted that individuals need to have the income necessary to make Chapter 13 repayment plans work. Many recent reports suggest that households throughout Illinois are struggling to keep up with their bills after seeing declines in their incomes.

On September 20, 2012, the Chicago Sun-Times reported that the Census Bureau estimated that the median household income of Chicagoans was $43,628 in 2011. This figure was nearly $7,000 less than the national figure of $50,502. According to the Chicago Tribune, the 2011 median household income was “$4,000 less than in 2009 and part of a steady decline over the past three years.”

While these realities make it difficult for many homeowners to have the income necessary to enter a Chapter 13 repayment plan, the good news is that individuals who are underwater on their mortgages and have lower incomes may still be able to file Chapter 7 bankruptcy . Unlike Chapter 13, individuals filing Chapter 7 will not be able to save their homes. However, they can use Chapter 7 to walk away from the house owing nothing. Also, individuals filing Chapter 7 will be able to live rent-free for a few months and discharge most or all of their unsecured debt.

If you are uncertain whether Chapter 7 or Chapter 13 is the best option for you and your family, our Chicago bankruptcy attorneys can help when you fill out the form on this page or contact our firm at (866) 930-7482.

Benjamin Brand Services – Chicago bankruptcy lawyers

1 In 3 Americans Poor Or ‘Near Poor’

Phyllis Pendleton is a social worker with Catholic Charities in Washington, and her husband is a janitor. Combined, the couple makes about $51,000 a year, or more than 200 percent of the official poverty line. Taxes, medical care and transportation to work cost them about a fifth of their combined salaries, leaving them with a disposable income of about $40,000 a year. As noted in the New York Times article published on November 19, 2011, when the poverty threshold is adjusted to $31,000 for the region’s high cost of living, and the couple’s income is 29 percent above the poverty line. Under the new measures of poverty released by the Census Bureau that was blogged about here last month, the couple is “near poor.”

Pendleton told the Times that the couple is living paycheck to paycheck. “One bad bill will wipe you out,” Pendleton told the Times.

According to the Times, 100 million people, or one in three Americans, are either living in poverty or in “the fretful zone just above it.” Half live in households headed by a married couple and 49 percent live in the suburbs. Nearly half are non-Hispanic white, 18 percent are black and 26 percent are Latino, according to the Times, which also noted, “Perhaps the most surprising finding is that 28 percent work full-time, year round.”

“These estimates defy the stereotypes of low-income families,” Census Bureau chief poverty statistician Trudi J. Renwick told the Times.

Some critics oppose the term “near poverty” for conjuring levels of dire need experienced by only a minority among the truly poor. What do you think of the Census Bureau’s new measure of poverty? Is the “near poor” label misleading? Our Chicago bankruptcy attorney wants to hear how you feel.

Benjamin Brand Services – Chicago bankruptcy lawyer

Record Number of Americans Living in Poverty

While the Census Bureau reported that there are 46.6 million people, or 15.1 percent of Americans, living poverty in 2010 under the decades-old official measure that considers only food costs and before-tax income, a new formula is trying to provide a fuller picture. The Associated Press reported on November 7, 2011, that a supplemental measure from the Census Bureau shows a record 49.1 million Americans, or 16 percent, lived in poverty in 2010.

With millions of Americans needing foreclosure help or considering bankruptcy , the new measure takes a variety of expenses into consideration, including food, shelter, clothing and utilities, as well as accounting for different sources of income like food stamps and housing subsidies. According to the AP, Americans 65 or older sustained the largest increases in poverty when broken down by groups under the revised poverty formula, nearly doubling to 15.9 percent. Medical expenses such as rising Medicare premiums, deductibles and expenses for prescription drugs are not accounted for in the official rate.

The AP noted that economists and anti-poverty experts “continue to differ widely on how best to calculate poverty,” and the Census Bureau acknowledged that its new measure remains a “work in progress.” You do not need to be formally recognized as living in poverty in order to pass the bankruptcy means test , but our Chicago bankruptcy lawyer can show you how filing Chapter 7 or Chapter 13 bankruptcy could very well be the fresh start you need to get back on your feet.

Benjamin Brand Services – Chicago bankruptcy attorney

Foreclosure Victims Will Pay More Than $72 Billion in Rent

As foreclosure forces millions of homeowners to suddenly become renters, a study from investment bank Morgan Stanley says these borrowers will pay $72.7 billion in incremental rent payments over the next five years as their credit heals. HousingWire reported on October 28, 2011, that there are roughly 7.5 million households either in foreclosure or delinquent on their mortgage. The lead author of the report, Morgan Stanley housing and securitized products analyst Oliver Chang, told HousingWire that he expects a drop in the U.S. homeownership rate to 60 percent in the coming years from 69 percent at its peak. The rate suffered its largest drop in seven decades when the Census Bureau reported this month that the rate tumbled to 65 percent from a decade ago.

HousingWire noted that there have been 8.9 million homes lost to foreclosure since 2007, the height of the credit crisis. However, many families are still in desperate need of foreclosure help . These homeowners most certainly would prefer to continue paying a mortgage rather than rent, which is why a bankruptcy means test could be their best option. A means test can help determine whether Chapter 13 or Chapter 7 bankruptcy will be the better option to help keep these families in their homes. If you are in a similar situation and facing foreclosure, our Chicago bankruptcy lawyers can help. Contact our office to receive a free consultation.

Benjamin Brand Services – Chicago bankruptcy attorneys

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