The Chicago Tribune reports from Illinois. "Bankruptcies have started to move back upward after an unusual roller-coaster ride over the past year. Though the numbers of new filings were low during the first three months of this year, each month was higher than the one before. Chicago bankruptcy attorney Melvin Kaplan says filings are starting to pick up again locally. 'It seems more people are in trouble than before,' he notes."

"There is a significant increase in late mortgage payments among sub-prime borrowers. Nationwide, just over 10 percent of sub-prime borrowers are at least 30 days late on their mortgage payments."

"What causes a person to fall into unmanageable debt? Sometimes there's one dramatic event that upends a household's finances. But often these are the final blow to a budget that was teetering on the edge. 'They're the frosting on the cake. The money troubles have been there," says Catherine Williams, VP for the parent company of Consumer Credit Counseling Services of Greater Chicago."

"One of the ways consumers coped with the rapidly rising cost of homes in the early part of the decade was by relying on new types of adjustable-rate mortgage loans that shrunk their payments-at least in the early years-to rock bottom. There are also 'interest-only' loans. According to LoanPerformance, interest-only mortgages made up nearly 20 percent of all new loans in the Chicago area in 2005 and 2006, and option mortgages accounted for another 4 to 5 percent."

"'Within another year we will probably start to see a large number of those loans being recast,' predicts Bill Schwers, Chicago-area mortgage manager for Bank of America. Most borrowers facing the big payment jump that comes with a recast will try to refinance into a more affordable loan, if their employment and credit standing allow them to qualify."

"Williams says she thinks problems with such loans are 'the boogeyman that will come out about next February. There's a little wiggle room, about four or five months, for this discomfort factor to work its way through the checkbook,' she says."

"Tessa Thouma of Carol Stream, didn't wait for increased interest payments to hit and recently refinanced out of an interest-only mortgage and into a fixed-rate loan. When she bought her one-bedroom condo in Carol Stream in 2005, she avoided making a cash down payment by taking out an interest-only mortgage at a relatively high rate of 7.8 percent and a second mortgage at an even higher 10.9 percent to cover what traditionally would have been the down payment. 'It's just a horrible loan,' Thouma says."

"Think twice, however, before you call one of those phone numbers broadcast on late-night television promising to help you wipe out credit card debts. Often they're pitching a home-equity loan that you would use to pay off the credit card debt. 'In theory, wrapping high-interest credit card debt into a home-equity loan works,' says Williams. 'But you only do it once!'"

"Instead, she says consumers often come to counseling after refinancing their home-equity loans two or three times, often borrowing more of their home equity in the process."

The Chicago Sun Times. "The South Side neighborhoods affected by a controversial mortgage law designed to protect would-be homeowners from being gouged have seen a 45 percent drop in home sales in the law's first month."

"'This law is like a thief in the night,' said Julie Santos, a McKinley Park Realtor who is collecting signatures in an attempt to repeal the law. 'I think it's discriminatory. It's ridiculous.'"

The Rockford Register Star. "Even with a healthy run up in property values this decade, Rockford’s housing market is more affordable than ever for mid-level executives. 'I had a client come in from California and they were able to get quadruple the house they had before,' said Michelle Lundsten, a relocation specialist in Rockford."

"She added the prices differences also makes it tough to leave sometimes. 'A client in Machesney Park had to relocate to Arizona for a couple of years because of work. They had to move into a house half as big as what they had here for twice the mortgage payment.'"

"Of course, this year the housing market has cooled both here and nationally. In fact, the dropping prices in major metropolitan markets actually is slowing the influx of Chicago residents. 'There have been a number of people in Chicago who want to move here but can’t because they can’t sell their house for what they owe,' said (realtor) Karl Gasbarra."