Bankruptcy Case
In this bankruptcy case study, the debtor resides on Colony Drive in Round Lake Park, Lake County, Illinois. The debtor has never file for bankruptcy relief in the past. She is currently a homeowner which has an approximate value of $90,000. The debt on the home owed to Wells Fargo totals $181,000. She is up to date on her mortgage payment at the rate of $1700.oo per month. Despite the fact that she is $91,000 underwater, she indicates that she does not wish to surrender her home. She has owned the home since 2008 and she purchased it for $200,000. In terms of vehicles, she has two vehicles. She has a 2008 Chevy Malibu which is financed by BMO Harris Bank. The vehicle is worth approximately $7000 and she owes nearly $5400. Her monthly payment is $170 and she is up to date and current. Her other vehicle is a 2002 Ford Explorer truck. The vehicle is paid in full with an approximate balance or value of $1500.
In terms of her personal property, she has a checking account and a savings account at Harris Bank with an approximate balance of $1100. She values her household goods at $4000. She values her clothing and jewelry combined at $500. In terms of retirement accounts, she has a 401(k) worth $80,000. She is receiving child support in the amount of $500 per month. She is expecting a tax refund of $3000 this year. She has a domestic pet dog that she values and $50. In terms of her household, she is divorced with three children living in the house. Two of the children are emancipated adults over the age of 18 and one is a minor, age 11.
In terms of employment, she is a mortgage banker at Harris Bank. She earns approximately $80,000 per year and she has been working in that capacity for the past 12 years. In addition to the $500 per month for child support, she earns approximately $6500 per month from her job. Moving onto her monthly expenses, she pays $1700 for her mortgage which does include real estate taxes and insurance. Her water bill is $150 per month, electricity is $100 per month, cellular telephone is $220 per month, cable television is $170 per month, Internet access is $30 per month, her food bill is $600 per month, her clothing bill is $125 per month, her medical expenses are $10 per month, her transportation expense for gas is $320 per month, her auto insurance is $180 per month and her auto payment is $170 per month.
In terms of her financial affairs, she earned $80,000 last year, $70,000 the year before, and she is on pace this year to earn $80,000. She does not have any lawsuits currently filed against her. She has not had any property repossessed or returned to a creditor in the last year. She has not closed any bank account in the last year. She does not own a safe deposit box. She has not lived at any other address in the past three years. She has not sold or transferred any real estate in the last four years. She has not owned a business in the last four years. She does not owe for any student loans and she does not owe for any tax debt.
The debtor in this case has credit card debt totaling $34,000 owed to a variety of merchants. She has very little in the way of medical bills and she has a 401(k) loan outstanding of $20,000. Chapter 7 bankruptcy would allow the debtor to eliminate the $34,000 worth of credit card debt as well as all of her medical debt. She would be able to repay her 401(k) loan over the next several years at an affordable rate. This is because she will no longer have the outstanding monthly credit card bills. Her property is protected since her house is underwater and her vehicles do not have significant equity. The approximate attorney fee for a chapter 7 bankruptcy in this case would be less than $1600. She would also have a court filing fee of $335. The debtor mentioned at the outset that the credit card debt was making it difficult for her to pay her mortgage on time. If she can eliminate her credit card debt, she will find it relatively easy to pay the $1700 per month mortgage payment based upon her monthly income. Thus, chapter 7 bankruptcy is my recommendation for this bankruptcy case.
