This is the bankruptcy case study of Adrienne Aranda who lives on Parkside Avenue in Chicago, Illinois. Adrienne has never file a bankruptcy case before so this is his first time going through the process. He owns a two flat that has a current market value of $250,000. The mortgage lender is Chase bank with an approximate balance owed of $460,000. Thus, he is over $200,000 underwater in terms of debt versus value. He is not renting any property as one of the flats is sitting vacant. In terms of vehicles, he has a 2005 Chevy truck valued at $3000 and it is paid in full. He also has a 1998 Toyota Four Runner with an approximate value of $1500. The two vehicles combined have over 250,000 miles on them. In terms of personal property he has bank accounts at TCF Bank totaling $4000. He has household goods, TV, audio, furniture, and minor accessories totaling up to two thousand dollars market value. He has normal clothing which he values at $500. He has a term life insurance policy which contains no cash value. He is expecting a tax refund in the amount of $800. He has a Honda ATV with $13,000 still owed on it. He is not in possession of the ATV as his friend had possession and stopped paying for it.
In terms of the description of his household, he is currently separated with two minor children: a 10-year-old son and an 8 year old daughter. He is a self-employed carpenter and has been doing carpentry for 11 years. He works out of Chicago, Illinois and earns approximately $22,000 per year. In terms of monthly expenses, he pays $1800 for the mortgage, $40 for water, $200 for electricity, $50 for a cell phone, $20 for Internet access, $300 for food, $20 for clothing, $10 for laundry, $200 for transportation, $100 for recreation, $50 for auto insurance, $15 for life insurance, and $50 for charity.
In terms of his summary of financial affairs, he has earned $8700 so far this calendar year. In prior years he has earned $22,000 and $35,000 respectively. He has not received any unemployment in the last three years. He has not been involved in any lawsuits in the last year. He has not closed a bank account in the last year. He has not lived at any other address in the last three years. He has no student loans and he owes no federal or state taxes.
The issue for Adrian is that he owes over $100,000 in credit card debt. Some of that credit card debt was used to prop up and maintain his business. However, there were no significant assets purchased on credit. He does have one minor piece of equipment that is valued at less than $2000 and would clearly be protected under the tools of trade exemption. This case would be a perfect opportunity to get a fresh start under chapter 7 bankruptcy laws. The debtor can simply eliminate the credit card debt, eliminate the mortgage debt and get back on his feet. He can continue to live in the property until the foreclosure process has gone through to completion. In the state of Illinois, a typical mortgage foreclosure case will last anywhere from 1 to 3 years depending upon your attorney. During this time, he should be able to save money as he will not be paying his current mortgage company. Once the bankruptcy case is over, Adrian will have the ability to reestablish some credit by purchasing a new vehicle financed through one of the many finance companies that cater to people who file for bankruptcy. By filing chapter 7 bankruptcy, Adrian will be in much better position to care for his two minor children. Hopefully, Adrian will get out of debt and then stay out of debt by being smart about credit in the future.