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Kevin O'Flaherty

Millions of people are out of work. Unemployment claims are at record highs. Many consumers are worried about paying rent, mortgages, and their other bills. Some lenders and service providers are offering their customers options for navigating these unprecedented times. The bad news is that the economy will get worse before any stimulus will trickle down to consumers at large. The economy can’t recover without people working. Employment is a driving force behind any recovery. 

So, what can we do? Contact your creditors. Talk to your landlord. When dealing with call centers, tell them that you have been economically impacted by COVID-19. If it doesn’t open up more options for you, you will at least have made that record with your lender. 

There are three important things that consumers should know during, and after, this crisis. 

Foreclosures and mortgage relief

Foreclosures and Mortgage Relief

When the housing bubble burst, mortgage foreclosures skyrocketed. In Illinois, we saw record numbers of filings. Cook County was flooded. Recent reports show that foreclosure filings are down to their lowest level since 2005. However, Illinois remains well above the national average. One of every 1,507 housing units in Illinois had a foreclosure filing in February 2020. 

Temporary relief offered by mortgage lenders may be useful in the short term. It is important to know what they’re offering and what it means long-term. If your payments are deferred to the end of your loan, then you’ll likely end up paying more interest over time. If you are offered a forbearance on your payments, you need to know what happens at the end of that period. Do you owe all the stalled payments at once? That may be unworkable for many people. 

If you fall behind on payments, then you will eventually receive a notice of default. That notice gives you 30 days to cure the default. After that, the bank will begin to move forward with foreclosure. In Illinois, all foreclosures are done through the court system. The court process gives homeowners time to work out a solution to their foreclosure. You will not lose your house the moment the case is filed. You remain the owner of your home until the property is sold at a sheriff’s sale and the court approves the sale. Defending your case is of the utmost importance. Even if you are working with your lender on a loan modification or short sale, the court process moves along. Pay attention to your case. Hire an attorney. Don’t go it alone. 



Filing bankruptcy can be an effective way to eliminate your debt. Major corporations file bankruptcy, prominent politicians have filed multiple bankruptcies in their lifetimes, you likely know someone who has filed. The law exists to protect you. Use it to your advantage. 

When you file bankruptcy, an automatic stay goes into effect. All collection actions against you must stop. If a creditor violates the stay, then there are strong legal remedies. If you qualify for a Chapter 7 bankruptcy, you can eliminate all of your debt without repayment. A Chapter 13 bankruptcy helps you reorganize debts and resolve them over time. 

The decision about when to file depends on your financial picture. If you have a large amount of credit card debts and a significantly reduced income, then you may want to file before you let the cards get far behind. Yes, bankruptcy changes your credit score, but more damage is done by the negative reporting from your creditors. The sooner you file, the sooner that stops. 

Federal Consumer Protection Laws

The Fair Debt Collection Practices Act protects you from debt collectors. In the last major recession, violations of the law increased as debt collectors became more aggressive. It will happen again. Here are some important things to know:

  • Your original lender is not a debt collector. If your credit card company calls you to collect, then it is collecting its own debt. Debt collectors collect debt for others. 
  • If you have filed bankruptcy, debt collectors cannot contact you during the automatic stay. Once you have discharged your debts, debt collectors cannot try to collect. If they do, they have violated the FDCPA. 
  • Debt collectors cannot threaten you or use abusive language. Debt collectors don’t have the ability to send the police to your home. Threats of any kind are inappropriate. However, telling you that a next step is referring the file to a law firm for collections is not a threat. 
  • Debt collectors cannot call you an excessive number of times per day. 
  • Debt collectors cannot discuss your debt with anyone else. 
  • Debt collectors must identify themselves as debt collectors and tell you that they are attempting to collect a debt. 
  • Debt collectors must send you a written notice of the debt and give you 30 days to request verification of the debt. Verification includes providing you with the name of the original creditor. 

It is smart to keep a written record of all calls from debt collectors. Open your mail. Don’t just toss collection letters. Contact a consumer defense attorney if you think you are being harassed. The law only protects you if you use it to protect yourself.

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.


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