Blog

Call Us312-704-0771

Chicago debt collection attorneys
Subscribe to this list via RSS Blog posts tagged in Chicago debt collection lawyer

Posted on in Debt Collection

Chicago Debt Collections LawyerOne of the most frustrating issues a creditor faces is when a customer stops paying their bills and their past due balance begins to accumulate despite the creditor’s attempts at collecting. That frustration can rise even more if the customer files for bankruptcy. When a person files for bankruptcy, the courts issue an injunction, referred to as an automatic stay, that halts all debt collection activity. Creditors who face this situation should speak to a Chicago debt collection attorney to find out what rights they have when it comes to collecting what the customer owes them.  

Bankruptcy Options

When an individual files for personal bankruptcy, they usually have two options, Chapter 7 or Chapter 13. A Chapter 7 bankruptcy is often recommended for people who do not own a home since it involves selling off any property the person has in order to pay off debts, although there are some exemptions to what type of property can be sold. It is often referred to as liquidation bankruptcy.

Chapter 13 bankruptcy provides bankruptcy filers the opportunity to restructure their debt, allowing them to keep their home and other property. It is usually the choice for people who have secured assets (home, vehicles, etc.). The court approves a repayment plan that allows the person to repay their debt over a period of three to five years. Once the repayment period is complete, any remaining debt is charged off.

...

chicago debt collection lawyerAt one time or another, most businesses will find themselves dealing with a client or customer who – for whatever reason – refuses to pay a bill. No matter what attempts the business makes to collect what is due them, the debtor still will not pay. There are several options a company has at this point, including hiring a collection company or retaining the services of a debt collection attorney.

Given the state and federal laws that have been put in place to protect debtors, it is important for creditors to make the right choice when turning to a third party for assistance.

What Is the Difference Between a Debt Collection Attorney and a Collection Agency?

When deciding which is the best choice, a business needs to determine how far they are willing to go to collect the debt. Is this debt something your company will pursue in civil litigation, if necessary? Although both a collections attorney and a collection agency have the same end goal, there are several critical differences to be aware of on their ability to reach that goal.

...

Chicago creditor’s rights lawyer for using debt collection agenciesThe COVID-19 pandemic has affected the world in horrific ways. Many people are still experiencing financial difficulties because of the pandemic. Various types of businesses across the country were shut down for months at the height of the pandemic, leaving millions of people without a job and without income. Now, a year later, the economy is slowly starting to pick back up, but many people are still struggling financially and missing payments on debts they owe. As a lender, not receiving payments can also be financially burdensome, forcing you to take action. In many cases, a lender will send an individual’s debt to a collection agency. However, sending a debt to collections is a big decision to make that could greatly affect the borrower and have an impact on the amount you receive. How do you know if sending a debt to collections is the right call?

Reasons to Consider Debt Collection

Before you decide to send a debt to collections to attempt to receive the money you are owed, there are several things that you should consider. Here are a few factors that may indicate that it is time to use a collection agency:

  • It has been more than 90 days since your debtor’s payment was due. You cannot just immediately refer a borrower to a collection agency if their payment is late. Many people make late payments, but they do so consistently. However, when a payment is more than 90 days late, this should raise red flags, especially if the borrower typically pays on time.

    ...

Illinois debt collection attorney judgment enforcement

Whether you are from a bank, a credit union, an auto lender, an equipment lender, a truck lender, or another financial institution that might be involved in bankruptcies or other debt collection activities, you might find that sometimes you need more assistance with judgment enforcement. Simply having a judge declare that money or other assets are owed to you or whoever you represent might not be enough to repossess or recover the assets from the debtor. For instance, the debtor might be ignoring your phone calls and letters or the debtor might be hiding the assets you are trying to repossess. Whatever the case may be, using the full power of the law at your disposal is a good idea to recover what the courts determine is yours. That is when you should call upon a professional judgment enforcement attorney to learn what they can do for you. 

4 Ways a Judgment Enforcement Attorney Can Assist You

Among the many ways a judgment enforcement attorney can help you with your court-enforced debt collection case are:

...

Illinois creditor and lender bankruptcy attorney

You might not be aware of it, but one of President Biden’s campaign promises was to make credit reporting fairer and more accurate so that everyone across the country, no matter their race or socioeconomic status, can have more equal and much better opportunities to access credit cards, loans, mortgages, and other financial offerings. As a representative from an auto lender, equipment lender, truck lender, credit union, bank, or other financial institution, you might want to learn more about the possibilities that the Biden Administration is open to with regards to credit reporting reform. Here are some new ideas that you might see over the next four years. Keep them in mind during your dealings with debt collection activities, including bankruptcies

3 Potential Changes to Credit Reporting That You Should Know About

While there are many reforms the Biden Administration might consider in the future for credit scoring and reporting, these are some of the more substantial changes currently under consideration:

...

Illinois debt collection attorney

As a financial professional, be it as a representative from a credit union, bankauto lendertruck lenderequipment lender, or other financial institution, it is important to work with an attorney who acts as an official litigator. Together, you might think you have everything taken care of when it comes time to investigate the finances of a debtor you suspect might be committing fraud or other wrongdoing. However, with regards to any number of debt collection activities, including such complicated legal processes as bankruptcy, you could also benefit from the assistance of a forensic accountant. 

What Does a Forensic Accountant Do?

Most of the time people assume an accountant does your taxes and that is about it, but as with most fields, there are plenty of subsets. Forensic accountants study the numbers and figures in financial and legal documents, intensively reviewing them to find discrepancies within the recordkeeping as to draw conclusions about potential wrongdoing. They can also confirm if certain errors were made, or support arguments to the contrary. 

...

Illinois debt collection attorney mortgage lender

Joseph R. Biden, Jr. was inaugurated as the 46th President of the United States of America on January 20, 2021. With barely enough time to celebrate this major achievement, he rushed to work and signed off on several executive orders and actions on his first day in office. One such executive order included extensions on the moratorium for mortgage foreclosures and rental evictions. Here are the details on this latest executive order, particularly helpful if you are a mortgage lender or servicer attempting to collect on the homeowners’ debts.

Extensions on Mortgage Foreclosure Moratoriums and Forbearance

President Biden issued several executive orders dealing with a wide variety of topics, including climate change, student loan debt, COVID-19 relief and regulations, and immigration. Of particular interest to mortgage lenders is the moratorium extension; request for even further extensions in the future; and updates to the newest forbearance guidelines. With regards to the moratorium, the new order mandates that:

...

Illinois debt collection attorney foreclosure

While the mortgage, rent, and income protections provided for in last spring’s original Coronavirus Aid, Relief, and Economic Security (CARES) Act have long since been exhausted, many states, including Illinois, have continued to offer their own executive orders and legislation to assist residents during this unprecedented time. In addition, many mortgage companies have developed their own programs for homeowners to help them avoid foreclosure, at least for the time being. However, that is not to say if you are looking to eventually collect on the debts owed from these properties that might be in preforeclosure, you should not be prepared to take action. Foreclosure debt collection will be inevitable post-pandemic, despite the latest COVID relief package being signed into law. In that sense, you, as a mortgage lender or servicer who deals with foreclosures, must remain focused on your job, collecting and documenting everything necessary to make the preforeclosure and foreclosure processes go smoothly whenever the time comes.

Advice to Mortgage Lenders When Prepping for Foreclosure During the Pandemic 

With the vaccines only starting to be administered and with the latest COVID-19 economic relief bill signed into law nine months after the CARES Act, you cannot expect things to get back to normal immediately. Therefore, the negative impact of COVID-19 on the economy, including housing, will persist far into 2021. Due to this, you need to be prepared for continual increases in foreclosures, including from residents of normally good standing with your mortgage lending or servicing company. To better prepare for an influx of foreclosures in the new year, consider the following tips:

...

Chicago debt collection attorney

It is common during the holidays, especially during Black Friday, for consumers to purchase more than they can actually afford; in fact, some of these shoppers are already struggling financially but believe the holiday gives them a great opportunity to max out their credit cards and take out loans for exorbitant holiday gift-giving before they eventually file for bankruptcy. There are ways to contest such holiday bankruptcy fraud, but this year might not be the same due to the pandemic. 

How COVID-19 Will Change Black Friday 

Numerous retailers are struggling financially as a result of the pandemic due in large part to early stay-at-home orders for all non-essential workers and businesses as well as the economic recession itself. Fortunately, those companies with strong e-commerce skills have been able to offer their products online. The pandemic will change Black Friday in this way—it will further accelerate the trend of people avoiding the in-store rush and simply shopping online instead. 

...

Chicago debt collection attorneyAs the economic repercussions of the COVID-19 pandemic persist across both Illinois and the entire nation, consumers have been looking for new ways to fund their daily expenses from paycheck-to-paycheck. Enter the cash-advance app, clever applications on their smartphones that link to their bank accounts and offer small cash advances each pay period provided the user meets certain requirements. Among them are such apps as Earnin, Dave, Branch, and Brigit, with countless others cropping up every day on your smartphone’s digital marketplaces. With these apps becoming more and more popular, many financiers and finance companies funding such major joint “fintech” ventures might be wondering how they can ensure appropriate debt collection. Overall, though, that might be the least of their worries at this point. Here are a few reasons why.  

Regulatory Issues

While to many consumers, these cash-advance apps might seem like a brave new world of brand-new trending apps that could really save them from some tough times, many financial experts argue that these apps are really payday lenders disguised as newfangled technology. The reason? Because many of them collect “optional” tips on every payday advance, many of which amount to interest rates comparable to standard (and high) payday-loan rates. In many cases, these apps are offered in states where payday loans of certain high interest rates are outlawed, or payday loans are entirely against the law. Such regulations have already taken their toll on the app Earnin, which was forced to disable the “tip” option a year ago in New York.  

How Cash Advance Apps Attract Borrowers and Ensure Repayment

These apps stay afloat for four primary reasons:

...

Illinois Mortgage Delinquencies May Rise Due to RecessionLawmakers in the U.S. recognized from the beginning of the COVID-19 crisis that homeowners would need help with mortgage payments in order to avoid a surge in mortgage foreclosures. The Coronavirus Aid, Relief, and Economic Security Act had several provisions for homeowners, including:

  • A moratorium on foreclosure of single-family homes with federally backed mortgages, which the Federal Housing Finance Agency recently extended until at least Aug. 31
  • A mandate that forbearance be provided to homeowners, regardless of their delinquency status
  • The loosening of restrictions on modifying loans

Illinois has issued executive orders that put a moratorium on evictions, though it also said that homeowners are still responsible for making mortgage payments. Housing market analysts are concerned that the downturn in the economy could lead to the state’s worst mortgage delinquency rate since the Great Recession of a decade ago.

Obstacles Facing Mortgage Payments

More than one million Illinois residents lost their jobs due to businesses being forced to close or reduce staff in response to the coronavirus outbreak. Even with unemployment benefits and stimulus payments from the federal government, many homeowners have tighter budgets with which to make mortgage payments. In some cases, homeowners may be forced to choose between staying current on their mortgage payments and paying for other necessary expenses.

...

 Four Ways Banks Can Improve Their Debt Collection ProcessCommon creditors such as banks will usually explore various means of collecting debts before they choose litigation. Filing a lawsuit for every debt collection dispute would be costly and hurt their relationship with potentially valuable clients. There are many cases that banks can resolve internally by working with the debtor. However, an inefficient debt collection process may ultimately be a waste of resources because of its low success rate. Adjusting your debt collection strategy may help you more effectively recover outstanding debts and understand when litigation is necessary:

  1. Collect and Verify Client Information: It is difficult to start your debt collection process if you cannot find the client. When entering the debt agreement, you should ask the client for personal information, such as their address, phone number, place of work, driver’s license, social security number, and personal references. If you are unable to reach the client with this information, check with government agencies and other third parties to see if your information is out-of-date.
  2. Be Proactive and Clear in Communication: Do not give your clients a reason to claim that they were unaware that they owed the debt. Send a message after the first time they miss a payment and follow up if they continue to not pay. Try to contact them in multiple ways until you get a response. Be specific about what they owe, when it is due, the consequences of not paying and how they can pay you.
  3. Establish Phases of the Collection Process: Debt collection starts with soft inquiries about the unpaid debt but will become more aggressive the longer that the client does not pay. You need guidelines that will determine when you reach a new phase of the debt collection process, such as sending a final notice or using litigation. You can measure phases by the amount of money owed, the duration of the case, and the client’s response.
  4. Use Different Approaches Depending on the Client: Automated debt collection messages may work fine with basic clients, but your most valuable clients need a more personalized touch. You need someone to contact them directly to figure out why they are late on the payment and to find ways that you can solve the issue while preserving your business relationship.

Contact a Chicago Debt Collection Attorney

Banks lend money to a variety of consumer and business clients, which can make collecting debts more complicated. You need an experienced Illinois debt collection lawyer at Walinski & Associates, P.C., who can advise you on how to approach your most difficult and important cases. To schedule a consultation, call 312-704-0771.

Source:

...

How Joint Bank Accounts Affect GarnishmentWhen you receive a favorable judgment against a debtor in a lawsuit, you will have a variety of sources from which you can retrieve the debt owed to you. Many people hold a majority of their money in bank accounts, and you can use non-wage garnishment to access that money if the debtor has not been using it to repay you. When you receive a garnishment order from the court, the debtor or other interested parties have an opportunity to contest the order and protect that money. In some cases, a person who shares the account with the debtor may try to block your garnishment order.

Non-Wage Garnishment

First, let us review the rules of non-wage garnishment during debt collection. Non-wage garnishment is a court order to withdraw money from sources other than the debtor’s pay from work. Bank accounts and physical assets are the most common sources for non-wage garnishment and can potentially be more valuable than the debtor’s wages. However, there are restrictions on non-wage garnishment:

  • The debtor has several exemptions to protect assets, including a $4,000 wild card exemption that can be used on any asset.
  • Illinois law exempts money awarded to the debtor through a personal injury or workers’ compensation case.
  • Illinois also exempts money in retirement and life insurance plans, unless the creditor can prove that the debtor created these accounts in bad faith in order to protect the money from garnishment.

Joint Accounts

The co-owner of a debtor’s bank account can stop a creditor from garnishing money from the account if a majority of the money came from them and not the debtor. The creditor bears the initial burden of proving that the account belongs to the debtor and should be eligible for garnishment. After the creditor proves this, the joint account holder is the one who must prove through deposit slips and receipts that they are the source of the majority of the money. Joint accounts are typically held between spouses or business partners, who in some cases may have debts that are not shared between each other.

...

Consequences of Violating an Automatic Stay During BankruptcyWhen a debtor files for bankruptcy protection, the court will put an automatic stay on collecting the debt. This means that creditors must stop contacting the debtor with collection notices or attempting to repossess collateral properties until the bankruptcy is completed or the stay is otherwise lifted. Violating the stay is a serious offense that may result in court fines or the debtor filing a lawsuit against you. The severity of the penalty depends on whether you knowingly violated the stay and whether you continued to violate it after being told to stop.

Violation Examples

Once it is confirmed that you received notice of the debtor’s bankruptcy filing, you are expected to comply with the automatic stay. This means you are not allowed to:

  • Send letters to the debtor demanding repayment
  • Call the debtor about the debt
  • Garnish their wages or other monetary assets
  • Repossess properties without the permission of the court

Intentionally ignoring the automatic stay is a violation of the Fair Debt Collection Practices Act and may lead to sanctions that cost you thousands of dollars. The bankruptcy trustee will be your contact during the process.

...

Assessing the Risk of Modifying a Commercial LoanLending to a commercial borrower has the potential to be more lucrative to a creditor than lending to a consumer borrower. The average consumer borrower will take out one major loan during their lifetime – a home mortgage. A successful business may continue to take out loans as it expands its operations, creating a long-term business relationship with the lender. There are risks when lending to a commercial borrower if the business struggles. Creditors know they must evaluate the likelihood that a business will be able to repay them before entering a loan agreement. They may need to adjust their evaluation if the commercial debtor falls behind on its loan payments.

Creditor Options

When a commercial debtor misses a payment, the one thing you cannot afford to do as a creditor is to ignore it. You should respond to the first missed payment by contacting the debtor to determine the reason for the missed payment. If the missed payments continue for several months, you have a difficult decision to make. You can:

  • Use debt collection practices;
  • File a lawsuit for lack of payment;
  • Foreclose on a property related to the loan;
  • Restructure the loan agreement to make repayment manageable; or
  • Offer forbearance to give the debtor time to avoid foreclosure.

Risk Evaluation

There can be benefits for both sides when modifying your loan agreement with a commercial debtor, even if you are losing some money on the original agreement. If the business is able to rebound and repay you, they may reward your assistance by continuing to borrow from you in the future. There is also the risk that modifying the loan will not prevent the business from defaulting on the loan, costing you more than if you had sought full repayment earlier. Identifying the differences between a good and bad risk depends on the circumstances, such as:

...

What Are a Creditor’s Rights When Collecting from Cosigners?A person looking to create a loan agreement may need a cosigner if the creditor is uncertain whether the borrower will be able to continue making payments until the loan is repaid. As a creditor, a cosigner may allow you to take a chance on a potential client by mitigating some of the risks. If the borrower defaults on their debt, you have another party that you can order to repay the loan. However, the cosigner will want to avoid paying you if they can get out of it. You must understand the rights of creditors and cosigners and the circumstances under which the cosigner is liable for the debt.

When Can You Collect from a Cosigner?

According to Illinois law, creditors are not allowed to take collection action against a cosigner until:

  • The primary debtor has defaulted on or is delinquent on the debt;
  • The creditor has notified the cosigner of this via first-class mail; and
  • The cosigner has had 15 days to repay the debt in full or make arrangements for repayment.

The cosigner may try to delay full repayment by asking for forbearance to catch up on payments or to refinance the loan for the primary debtor. You must assess whether it is worthwhile to delay the collection process or allow the debtor to modify the repayment plan. The debtor may lack the financial resources to continue the loan payments on their own, making collection from the cosigner inevitable.

...

Three Limitations of Wage Garnishment for CreditorsWage garnishment is one of the most direct tools that creditors use to collect from noncompliant debtors. A creditor can submit a garnishment order after it has filed a lawsuit against the debtor and received a money judgment from the court. Employers are required to comply with a garnishment order and can be fined if they do not withdraw the exact amount ordered or if they retaliate against the debtor for the garnishment. However, wage garnishment has limitations that can sometimes prevent a creditor from collecting the necessary money from the debtor. Here are three facts about wage garnishment that creditors should know:

  1. Cap on Withdrawals: There are federal and state protections against wage garnishment to prevent creditors from taking all of a debtor’s wages. First, garnishment must come from the debtor’s disposable earnings, which is the debtor’s wage after deducting expenses such as Social Security and pension contributions. Commercial creditors in Illinois are not allowed to garnish a wage unless the debtor makes more than 45 times either the state or federal minimum wage – whichever is higher. With Illinois currently having a higher minimum wage, debtors must earn more than $371.25 per week. If the debtor is eligible, commercial creditors can take the amount that the wage exceeds $371.25 per week or 15 percent of the debtor’s wage – whichever is lower.
  2. Employees Only: Wage garnishment applies only to debtors who are employed and receive a W-2 form from their employer. Freelance workers, independent contractors, and self-employed workers do not qualify for wage garnishment. However, the owner of a corporation does qualify for wage garnishment if they pay themselves through the company. If wage garnishment is not allowed, the creditor can request non-wage garnishment instead. This order allows it to seize the debtor's other assets, such as bank accounts and personal properties.
  3. Order of Priority: A debtor may own several debts other than commercial debts. Some of these debts take priority over commercial debts, such as child support, federal income taxes, state levies, bankruptcy payments, and defaulted student loans. These collectors are allowed to garnish more from wages than the state’s limits on commercial creditors, but there may still be a limited amount of money left after these debts are paid.

Contact a Chicago Debt Collection Lawyer

If wage garnishment is not an efficient means of collecting a debt, there are other tools you can use. A Chicago debt collection attorney at Walinski & Associates, P.C., can explain your options after winning your lawsuit against your debtor. Call 312-704-0771 to schedule an appointment.

Source:

...

When You Can Foreclose on a Reverse MortgageOlder homeowners can use a reverse mortgage as a source of income or credit. While borrowers qualify for regular mortgages based on their income, a reverse mortgage is based on the borrower’s equity in their home. People age 62 and older are eligible to take out a reverse mortgage on their principal residence as long as they own it outright or have enough equity in it. The mortgage balance is not due until a qualifying event occurs. If the borrower or their heirs do not repay the mortgage, the lender may foreclose on the property.

When Can a Reverse Mortgage Become Due?

According to Illinois’ Reverse Mortgage Act, there are five ways that the balance on a reverse mortgage can become due:

  • The borrower or last remaining tenant dies;
  • The property is sold;
  • The borrowers no longer use the property as their principal residence;
  • The reverse mortgage contract included a maturity date; or
  • The borrowers failed to meet their contractual obligation to maintain the home.

When the borrowers die, their heirs will determine whether to repay the reverse mortgage, sell the home or allow a foreclosure. The borrowers may leave or sell the home if it does not meet their needs in old age. However, a lender may foreclose on a borrower’s home while the borrower still lives there if the borrower cannot pay property taxes and home insurance or maintain the value of the property. Unlike with other foreclosures, lenders often cannot seek deficiency judgments against borrowers of reverse mortgages if the property sells for less than the balance of the mortgage.

...

What Voluntary Repossession Means for Auto LendersRepossession is often the last resort for auto lenders when dealing with debtors who are behind on their loan payments. You are more likely to retrieve full value on the loan if the debtor continues to make payments than if you repossess the vehicle and resell it. There is also the hassle of notifying the debtor of your intention to repossess and hiring someone to tow the vehicle for you. However, the process can be simpler if the debtor voluntarily turns the vehicle over for repossession. In most cases, the debtor will be the one to suggest voluntary repossession.

How It Works

The result of voluntary repossession is the same as involuntary repossession. You will regain possession of the vehicle and sell it to recuperate the money owed on the loan. The debtor will be liable for any deficiency between what you receive in the sale and what remains from the loan. The difference is that the debtor agrees to surrender the vehicle and will deliver it to you at a time and place of your choosing. The debtor’s compliance means that you will not be fighting over whether you have the right to repossess the vehicle or using a towing service to retrieve the vehicle.

Why Voluntary Repossession?

The debtor still has much to lose by surrendering the vehicle to you. They are losing possession of the vehicle and defaulting on the loan, which will hurt their credit. However, they may prefer voluntary repossession if they believe repossession will be unavoidable:

...

Can You Retrieve Debt From a Retirement Plan?When you receive a court judgment against a debtor, you are looking for any of the debtor’s available money or assets that you can claim. Retirement accounts can be one of the most lucrative assets that a debtor owns if he or she has had time to contribute to it. However, many retirement accounts are protected from creditors, whether after a successful lawsuit or after the debtor has filed for Chapter 7 bankruptcy. Creditors need to understand what type of retirement account the debtor has to know whether they can try to collect from it.

Federal Laws

Both federal and state laws address which types of retirement accounts are exempt from creditors. Federal law protects debtor retirement plans if they are:

  • Qualified retirement plans created under the Employee Retirement Income Security Act; or
  • Social Security benefits.

Common ERISA plans include 401K plans, profit-sharing plans, and deferred compensation plans. An anti-alienation clause prevents creditors from collecting from qualified ERISA plans because the clause states that the participants in the plan cannot give away their benefits and outside parties cannot take them away. This prevents the plan administrator from releasing any funds to a creditor. However, creditors may be able to collect the benefits from an ERISA plan once they are distributed to the debtor.

...
Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
Back to Top