Many people struggle to pay off debt, particularly credit cards with not-so-good interest rates which many rely on to make ends meet. When consumers get behind on payments, creditors may take them to court resulting in a judgement that requires payment of the debt with interest over very long periods of time – judgments that stay on credit history reports until they are paid in full.
A new law offers help to low income consumers who are taken to court over unpaid bills in Illinois. Beginning January 1, 2020, the new law will cap interest rates at 5% (down from 9%) on consumer debt of less than 25K and limit the window in which creditors can collect to 17 years, down from 26 years under the current law. Lawmakers hope the move will help to end the cycle of poverty many face when they are straddled with old debt, acknowledging that Illinoisans work hard to pay what they owe.
Does the Law Go Far Enough? Consider Bankruptcy Protection
While legislative measures to push back on creditors is welcome, perhaps giving consumers a fighting chance to repay debt and get back on their feet, it is also worthwhile to consider options such as bankruptcy protection that may go further to provide relief.
Although the new law may help ease the burden, it may not go far enough when considering that Chapter 7 bankruptcy offers individuals and families struggling with a difficult financial situation an opportunity to liquidate or erase unsecured debt. Chapter 7 Bankruptcy is often a viable option for low income earners with few assets who want to get a fresh financial start by eliminating credit card or medical debt, allowing them to start anew.
For those who have assets they want to keep such as a home or car, who have a steady income but are falling short, Chapter 13 bankruptcy protection is another option. Under Chapter 13, a debtor can enter into a repayment plan ranging from 3 to 5 years, with most remaining debt forgiven after the payment period concludes. Creditors are put on hold and with any luck a debtor will be able to land on their feet with their assets intact following the repayment plan, all in a considerably shorter time frame when looking at a 17 year repayment with interest under the new law.
Contact an Experienced Illinois Bankruptcy Lawyer
Getting all the information regarding your bankruptcy protection is key. If your financial situation has taken a downturn and you are struggling to make payments, don’t wait to seek the advice of an experienced bankruptcy attorney. Proactively seeking a solution to a financial issue is far better than being at the mercy of creditors and often helps consumers turn the corner on a difficult financial issue. Contact the Peoria bankruptcy law offices of Charles E Covey for more information regarding whether bankruptcy protection is a good strategy for you at 309-674-8125.