Nature Of The Debtor
This is the chapter 7 bankruptcy case study for Mrs. C., who resides in Wheeling, Illinois. She has come to the office with the simple thought in mind to eliminate her outstanding credit card debt and medical debt. She has been struggling for approximately three years. Although she has been able to maintain the minimum monthly payments on her credit cards, she is no longer able to sustain herself based upon her newfound rental obligations. Let’s examine the facts of her case.
She is currently separated from her spouse and they are living in two separate states. She has no minor children. She is currently working as an instructor and has been working in that capacity for the past four months. She earns approximately $1.100 per month. Her monthly expenses exceed that by far. The reason for this is her current rental obligation of 850 a month which is happening due to the separation from her spouse. Once the rent is paid per month, there is very little else available for necessities. The least of which, are the minimum payments on the credit cards. They simply cannot be maintained or sustained on an ongoing basis based upon her debt to income ratio.
In terms of personal property, she has one significant asset. That asset is a 2012 vehicle which is valued at approximately $8000. The vehicle technically exceeds the auto exemption in the state of Illinois. Even when combining the $4000 wildcard exemption, there is available equity from which a trustee can seek to administer the asset. The debtor can always buy out the trustee’s interest in exchange for her fresh start if she chooses to do so. In terms of other assets, she has a small checking account valued at $300, normal household items valued at $700, normal apparel valued at $300, and a domestic pet.
In terms of her statement of financial affairs, she has earned approximately $6000 during the current year. In the prior two years, she has earned approximately $20,000 in each year. She has had two prior residences within the past two years. Both of those residences were out of state. She also had an interest in a sole proprietorship which closed in December. That business had no assets, no accounts receivables and no outstanding legal matters. She does have a co-debtor on one of her credit cards and one of her utility bills. She also owes the department of revenue $250 for tax year 2015. She is aware that the tax debt is non-dischargeable.
In terms of outstanding debts, she has approximately $12,000 in combined debt. The debt primarily consists of credit cards and medical bills. She also has some minor utility bills, but nothing significant. Based upon her income and in light of the nature and amount of the debt, I am recommending a chapter 7 bankruptcy filing. The chapter 7 will eliminate all of her outstanding debt other than the tax debt, which is minimal. The vehicle is at risk from administration from the trustee. However, I am fairly confident that there would not be significant non-exempt equity from which a trustee would seek to administer the asset. There is a risk, but a rather small one.
Thus, based upon my initial intake, consultation and advice, I am suggesting a chapter 7 bankruptcy filing. If you have concerns about your financial situation and whether a bankruptcy filing would be beneficial to your financial outlook, you may contact me at 847-520-8100.