Chicago, Illinois Bankruptcy Blog

Before the Great Recession, many people attached a great stigma to declaring bankruptcy. This perception often caused many eligible individuals to shy away from seeking relief from their debts out of fear of being branded a "failure."

However, in the aftermath of the recession, bankruptcy attorneys are observing a drastic change in public opinion. Whereas bankruptcy was once viewed - some would say unjustifiably - as the result of an individual's own financial irresponsibility, it is now being seen as the product of creditors' unfair practices.

Increasingly, bankruptcy filers are the victims of economic circumstance. They haven't behaved irresponsibly, they have simply fallen prey to the turbulent economic times - they lost jobs, got sick or had problematic mortgages and couldn't keep up with the bills. When lenders unexpectedly raised interest rates or refused to consider loan modifications, borrowers were left with no choice but to declare bankruptcy.

Creditors are growing increasingly desperate to collect on their debts. In fact, some of them are becoming anxious that they are breaking the law to do it. Rapacious creditors are taking large risks mostly because they know that most debtors do not know the laws and are unlikely to challenge them.

The Fair Debt Collection Practices Act (FDCPA) is a federal law that lays out guidelines for any debt collectors attempting to collect on a debt. It was originally created to curb the swell of abuse from debt collectors and providing a means for consumers to challenge debts and report violations. The law also sets out penalties for debt collectors who violate it.

As of February 2011, home prices that were expected to rebound have in fact sunk 3.3 percent putting February sales at barely above the historical lows of April 2009.

The Case-Shiller home price index, compiled by Standard and Poor's, tracks the value of real estate in areas across the country by collecting data each month on sales of single-family houses. The S&P/Case-Shiller index reports home values down 32 percent from their peak in 2006. According to David Blitzer, spokesman for S&P, the trend is expected to continue.

The downward spiral of home prices came in two stages. After the spring 2006 high point, a period of three years of uninterrupted declines was recorded. Then, a 13-month increase with a 5 percent gain gave the market a false sense of hope until the rebound ended in June. Losses have been recorded every month since then and the market is edging toward a new low, being referred to as a double-dip.