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ProfitWise News and Views, April 2006
Bankruptcy - The New Law

 In This Issue

This issue of Profitwise News and Views features articles on

  • District News
  • Poverty and the location of financial institutions
  • The new bankruptcy law
  • An Illinois program to help working families buy homes

Around the District

This article summarizes news and events in Illinois, Indiana, Iowa, Michigan and Wisconsin.

The Impact of Poverty on the Location of Financial Establishments: Evidence from Across-County Data

The location of bank branches is an important issue for consumer advocates and other groups that monitor access to financial services for low- and moderate income people. The proximity of banks and their branches to the places where people live and work is one basic element of mainstream financial access. The ability of people to choose from an array of financial products, especially those offered through the banking system, is fundamentally related to the economic well-being of a community. Read more ... 

Bankruptcy – The New Law

New provisions under bankruptcy law became effective on October 17, 2005. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed by the 109th Congress on April 14, 2005, and signed into law by President Bush on April 20, 2005.

The new legislation made sweeping changes to existing bankruptcy law, and the main result appears to be that it will now be more difficult for certain individuals to discharge all debt in Chapter 7 filings than under the old law. Individuals under the new law will have to demonstrate whether or not they have the ability to repay some or all of their debt. If the court determines that the consumer does have the ability to repay, s/he will be forced into Chapter 13, as opposed to Chapter 7. The filer as an alternative may simply withdraw the filing. There is now a “means test” to qualify for Chapter 7. Simply put, Chapter 7 extinguishes all debt, other than priority debt such as child support, taxes and certain types of judgments. Chapter 13 does not extinguish all non-priority debt, but requires repayment of at least some debt (often including unsecured debt) over a certain time period — generally three years under the prior statute and five years
under the new. Read more ...

Illinois Launches Program to Help Working Families Buy Homes

Building on a commitment to help working families realize the American Dream of homeownership, the state of Illinois has launched a new mortgage program designed to help working, taxpaying individuals and families buy homes.

The program, called Opportunity I-Loan, will help individuals and families who are first-time homebuyers and do not have traditional checking accounts or have not been able to establish credit histories or qualify for low interest mortgage loans. This program will make Illinois only the second (and the only current) state in the nation to provide affordable, 30-year fixed-rate mortgage loans for qualifying individuals and families that work and pay taxes – but have either no (traditional) credit history, no Social Security number, or have neither. The program also serves as a viable alternative to high-cost, predatory home loans. Read more ... 

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