Illinois Debt Consolidation
Debt Help in Illinois
Illinois residents who are drowning in debt often look for a way out. While there are no “get out of debt free” options, some government programs and non-profit groups can make debt easier to handle. Before succumbing to your debt, take a look at the options you have.
Illinois Credit Counseling and Debt Consolidation
Credit counselors work with those who have significant debt in order to help them make a budget and stick to it. However, some credit counselors prey on those who have high levels of debt by charging high fees for their services. If you need help in sticking with your financial plan, make sure you have the right help.
The Division of Banking recommends working with a non-profit credit counseling agency. You can find information about these at http://www.state.il.us. You can also benefit from working with a credit counselor who is part of the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). Both of these organizations provide a measure of accountability to their members.
You may find that one of the recommendations offered by the credit counselor you choose is to consolidate your debt. Debt consolidation allows you to take your existing debt and lump it into one loan or mortgage. Often these are secured loans that have some form of collateral behind them, thus lowering your interest rate substantially. This can lower your monthly payment, making it possible to pay off the debt sooner. The goal of a debt consolidation loan is to pay down your debt, so do not add to it by starting to use those credit cards again.
Illinois Debt Relief Programs
Another option to consider when dealing with high debt is a debt relief program. These companies go a step further than credit counselors, because they actually negotiate with creditors to lower rates, get debt settlements, or otherwise make your debt situation slightly better.
However, proceed with caution when using these companies. You will have to pay for the help they offer. Many debt relief companies are more interested in taking your money than really helping you pay down your debt. Check with the Better Business Bureau to ensure that you are working with a reputable company. Make sure you know exactly what your money will be used for and whether or not the money you send is going toward your debt or toward the company’s fees.
Illinois Debt Collection Laws
Debt collectors may start calling if you fall behind on your debt. Be sure that you understand your rights when it comes to debt collection practices. No matter what the circumstances, debt collectors may not do the following:
• Harass or abuse anyone they talk to
• Be deceptive when attempting to collect a debt
• Use unfair practices, such as calling collect or asking you to pay fees not associated with your creditor
If at any time you wish to stop the debt collections actions, you must write to the collection agency informing them of your wishes. Once they receive the letter, they may not contact you unless it is to inform you of some change to your account. When the debt collections calls stop, you are still responsible for your debt.
Debt collectors typically call you or contact you in person to ask for payment on the debt. If they choose to call, they are not allowed to call at inconvenient hours, such as before 8:00 a.m. or after 9:00 p.m., unless you ask them too. Also, if your employer requests no personal phone calls at work, they cannot call you at work once you tell them this. They also must talk to your lawyer instead of you if you are working with an attorney.
After the first phone call, the debt collector must send you written notice revealing your creditor, the amount of the debt, and what you can do if you wish to dispute the debt. This notice must be sent within five days. If you send them a letter stating that you do not owe the money, the debt collector may not contact you any more, provided you sent the notice within 30 days of the first phone call. However, if the debt collector has proof that you do, in fact, owe the debt, then contact may resume.
If your debt goes into default, Illinois statute of limitations laws dictate when the creditor must file legal proceedings. If the creditor fails to file legal proceedings within this time period, you are no longer responsible for the debt. These limitations are as follows:
• Oral agreements – 5 years
• Written contracts – 10 years
• Promissory notes – 6 years
• Open accounts (like credit cards) – 5 years
If you feel that a debt collector has overstepped his or her bounds, then contact the FTC (www.ftc.gov).
Illinois Mortgage Assistance Programs
The Illinois Housing Development Authority offers Illinois homeowners and homebuyers assistance in the mortgage industry. For current homeowners struggling to pay their bills and facing foreclosure, the IHDA recommends calling 1-888-995-HOPE.
First time homebuyers can work with the IHDA to get a mortgage. Low to moderate income first-time home buyers can get mortgages below market rate. The IDHA also provides resources and financing options for those who may not qualify for conventional loans. The IDHA also has grant programs to help with down payment assistance.
One of the most popular programs offered by IDHA is the HOME START program. Under HOME START, buyers get a 30 year fixed rate loan insured by the FHA. Because of the FHA backing, those with less than perfect credit may still be able to get a loan. In addition to the 30-year mortgage, the HOME START program also offers a down payment assistance loan, which is a 10-year, zero percent loan for three percent of the purchase price up to $6,000. The program requires homebuyers to go through homeownership counseling and meet certain income and purchase price guidelines.
Illinois Government Assistance Programs
Illinois does not offer state-sponsored debt assistance programs. For some families, other government assistance programs, like the Temporary Assistance for Needy Families, can provide enough financial support to allow them to pay down their debt and restart their financial situation.