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5 Types of Loan Modifications Creditors May Negotiate With Debtors

 Posted on April 27, 2023 in Loan Modification

Chicago Creditor Loan Modification LawyersThere are a variety of situations where creditors may need to deal with borrowers who have defaulted on loans or are struggling to make payments. While there are many debt collection options available to creditors, it can sometimes be beneficial to work with a debtor to find solutions that will allow them to continue making ongoing payments. Loan modifications may involve changes to a lending agreement that will make it easier for the debtor to adhere to the terms of repayment. By understanding the different types of loan modifications that may be available, creditors can take steps to protect their financial interests.

Options for Modifying Loans

To address delinquent loans or defaults, creditors may reach agreements with debtors that may include:

  • Forbearance - A creditor may agree to suspend or reduce a debtor's monthly payments for a specific time period. This can be a good option for borrowers who are experiencing temporary financial difficulties due to unexpected changes in their lives, such as health issues, job loss, or divorce. However, forbearance is not a long-term solution, because the debtor will be required to resume payments at some point in the future. The missed payments may be added on to the end of the loan term, or future payments may be temporarily increased, and this may mean that the borrower will owe more in the long run.

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How Can a Creditor Protect Their Rights During a Foreclosure?

 Posted on April 14, 2023 in Creditor's Rights

Cook County Creditor Foreclosure LawyersWhen debtors default on mortgage payments and fail to pay what is owed to a lender, foreclosure proceedings may be necessary. The foreclosure process can be lengthy and confusing, and it is important for mortgage lenders or other creditors to understand their rights and responsibilities. By taking steps to protect these rights and resolve any issues that may arise during a foreclosure, a creditor will be able to minimize their losses and recover as much of what is owed to them as possible.

Issues to Address as a Creditor During a Foreclosure

Creditors, including primary mortgage lenders, mortgage servicers, and second mortgagees, can protect themselves during foreclosures by doing the following:

  • Follow the law - It is important for creditors to follow all applicable laws and regulations throughout the foreclosure process. Depending on the type of loan, there may be specific notice and filing requirements, mediation procedures, and other legal requirements under state law. Failure to follow these requirements can result in delays or even dismissal of the foreclosure. An attorney can provide guidance on the laws that apply in a specific situation, and they can help address any legal issues that may arise during a foreclosure.

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Protecting Creditors’ Rights When Negotiating Settlements With Debtors

 Posted on March 27, 2023 in Debt Collection

Chicago Creditors' Rights Lawyers

Creditors have certain rights when it comes to collecting debts owed by debtors. While there are a variety of debt collection options available, there are some situations where it may be beneficial for both creditors and debtors to negotiate settlements that allow a debtor to pay less than the full amount owed to a creditor. In these situations, it is important for creditors to know how to protect their rights and ensure that any settlements reached with debtors are fair while protecting the creditor's best interests. By understanding the potential strategies that may be used when negotiating settlements with debtors, creditors can take steps to minimize their financial losses and ensure that settlements can be completed successfully.

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How Can Creditors Avoid Violations of the Fair Credit Reporting Act?

 Posted on March 15, 2023 in Creditor's Rights

Cook County Creditors' Rights Lawyers

The Fair Credit Reporting Act (FCRA) is a federal law that establishes rules and regulations for the collection, maintenance, and use of consumer credit information. This law was designed to protect the privacy of consumers and their credit information. It requires creditors to treat consumer credit information with care, accuracy, and responsibility. If a creditor fails to abide by these laws when collecting debts or taking other actions, they may face serious legal consequences.

Understanding Creditor Requirements Under the FCRA

The FCRA governs how creditors must handle consumer credit reports, as well as any other information related to a consumer’s creditworthiness. For example, it requires that any creditor who obtains a consumer’s credit report must have a “permissible purpose”—which means they must be able to show that there is a legitimate business reason for obtaining the report. It also restricts creditors from reporting inaccurate or outdated information about consumers and requires them to provide consumers with access to their own files if requested.

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What Options Are Available to a Creditor When Repossessing a Vehicle?

 Posted on February 21, 2023 in Auto Lenders

Chicago Vehicle Repossession Lawyers

Repossession of a vehicle is an effective way for auto lenders to recoup losses in the event that a customer has not been able to meet their contractual payment obligations. However, when a creditor repossesses a vehicle from a borrower, it can be a tricky and uncertain process. Creditors need to be aware of their legal rights and the options available to them in these situations.

Due Process Requirements

The first step for any creditor is to familiarize themselves with the due process requirements in their state. Creditors may have certain duties they are required to fulfill before they can legally repossess a vehicle. In some states, a creditor may be required to provide written notice to the borrower, informing them of their right to cure the default. However, Illinois law does not require a creditor to notify a debtor prior to proceeding with a repossession. If necessary, creditors may still contact debtors to notify them of missed payments and inform them of the consequences of defaulting on a debt.

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How to Protect Creditors’ Rights When a Debtor Declares Bankruptcy

 Posted on February 07, 2023 in Creditor's Rights

Illinois Creditors' Rights Lawyers

Creditors have a right to take all reasonable measures to recover debts owed to them. However, debtors are also afforded with certain protections, and they may take steps to eliminate the requirement to pay certain debts by filing for bankruptcy. When a debtor declares bankruptcy, creditors should take the appropriate steps to protect their rights and determine how they can minimize their losses. The steps creditors can take in these situations include understanding the relevant provisions of the U.S. Bankruptcy Code, determining how different types of bankruptcy will affect creditors’ rights, contacting a bankruptcy trustee to discuss their rights as a creditor, paying close attention to any documents they receive from court officials or trustees, taking full advantage of all available remedies under state and federal law for recovery of their claims, and remaining in contact with their attorney throughout the bankruptcy process.

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Read Our Top 10 Debt Collection and Creditors’ Rights Blogs for 2022

 Posted on January 16, 2023 in Debt Collection

IL debt lawyerWith the changing laws and regulations surrounding debt collection rights, keeping up with the latest developments can be a challenge for creditors. At Dimand Walinski Law Offices, P.C., we are dedicated to representing creditors in debt collection matters, and we also regularly publish blogs to help keep creditors informed of the relevant issues that may affect them. We wanted to highlight the top 10 blogs that visitors to our site read in 2022:

  1. What Are the Statutes of Limitation for Debts in Illinois? - This blog looks at the time limits that apply to creditors who are seeking to collect unpaid debts. We updated this blog in 2022 to provide more information about the procedures that creditors will need to follow to pursue judgments against delinquent debtors.

  2. Illinois Suspends Vehicle Repossession by Auto Lenders - In 2020, the state of Illinois took action in response to the COVID-19 pandemic to prevent creditors from repossessing vehicles from delinquent debtors. We provide information about how this order affected creditors, including updates about the options that may be available after the order expired.

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UPDATE: What to Do If Your Debtor is Judgment Proof

 Posted on January 05, 2023 in Debt Collection

What to Do If Your Debtor is Judgment Proof

Originally published: July 30, 2020 -- Updated: January 5, 2023

Update: When a debtor is judgment-proof, a creditor may have limited options for collecting debts. If a debtor's assets are exempt, they may not be seized and liquidated if the debtor files for bankruptcy. If a debtor's income is below a certain amount, it may not be possible to garnish the debtor's wages. However, creditors may have other options, including negotiating loan modifications with the debtor. This may be a good solution in situations where a debtor has secured debts and does not want to turn over the property they have used as collateral.

Loan modifications are agreements between the creditor and debtor that allow for changes to be made to the original terms of a loan. By negotiating these types of modifications, creditors can continue to receive ongoing payments from the debtor and minimize their financial losses, and debtors may be able to avoid the loss of property through repossession or foreclosure while ensuring that they will still be able to make affordable payments toward the debts they owe. 

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How to Make Sure a Mechanic’s Lien Is Valid and Executed Correctly

 Posted on December 16, 2022 in Debt Collection

IL debt collectin lawyerA mechanic's lien is a legal way for creditors to secure payment for work that has been done on a property. It is typically used by construction companies, subcontractors, suppliers, and other professionals whose services are used in the building or improvement of real estate, although finance companies may also need to address mechanic's liens as they take steps to collect debts. If a person or company is not properly paid for work that was performed or materials that were supplied, they may file a claim against the property that will require a lien to be paid before the property can be sold or ownership can be transferred in the future. To ensure that a mechanic’s lien will be valid and enforceable in court, there are certain steps that must be taken.

Filing the Lien

In order for a mechanic’s lien to be valid, it will need to be filed with the appropriate government office within strict timeframes. In Illinois, a claim can be filed with the recorder of deeds in the county where the property in question is located. This claim must be filed within four months after a construction project was completed, the date that materials were delivered, or when work was last performed. A claim must state the balance that is due, provide a description of the property, and include details about the contract to perform work or provide materials.

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Enforcing a Judgment Through a Citation to Discover Assets to Debtor

 Posted on December 12, 2022 in Debt Collection

chicago judgment enforcement lawyerThere are numerous situations where creditors may need to take legal action to collect debts, including by filing a lawsuit against a debtor and obtaining a legal judgment. After receiving a judgment, a creditor will then need to enforce the judgment, and they may be able to collect what is owed by seizing a debtor's assets or garnishing their wages. However, before doing so, a creditor may need to use a citation to discover assets to determine the financial resources available to the debtor that may be used to pay the amount owed. 

While citations can be served on multiple parties, including a financial institution or a debtor's employer, a Citation to Discover Assets to Debtor may be served to the debtor themselves, and it will require them to appear in court and answer questions about their assets and income. By understanding the procedures followed in these types of citations, creditors can ensure that they will be able to uncover the necessary information and compel a debtor to make payments or turn over assets.

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