Chapter 13 Bankruptcy Recommended Client

This is the case of Jimmy Brownlow who resides in Chicago, Illinois.  He’s here for a consultation regarding Chapter 7 or Chapter 13.  Mr. Brownlow has never filed for bankruptcy before.  He does have a two flat which is worth approximately $176,000 and he owes $179,000.  He has property tax arrears of $1400.  He is $25,000 behind with his mortgage company Chase and he has indicated that he wants to surrender the two flat.  He’s not renting from anybody and nobody is renting from him so he is not gaining any monetary value for having the two flat.

In terms of a vehicle, he has a 2001 Chevrolet Blazer which is paid in full with an approximate value of $25,000.  He has a checking account at Here is Bank and he has a savings account with approximately $25,000 in it.  So the first question is why does he have that much money in a savings account when he is behind on his mortgage?  It’s obvious he wants to surrender the property.  It has very little or no equity in it and he’s tired of throwing good money after bad.

Normal clothing, normal household goods.  He can’t sue anybody for any reason personal injury or workers compensation and he does not expect to inherit any money in the next six months.  He is a divorced man with no dependent children.

He is working for United Airlines for the past 13 years in Chicago O’Hare Airport and he is doing ramp service.  He makes approximately $2400 per month.  He is not even living in the two flat right now, he is living with a parent and not paying any rent.  So his monthly expenses are very low.  In terms of income the last three years, he has made $50,000 over the last two years.  So far year to date this year he has made $20,000 but he is expected to make the same $50,000 by year’s end.  Nobody is suing him, he is not being garnished, and he hasn’t owned a business in the last four years.  There are no co-debtors, he has no student loans.  He has no income tax debt.

In terms of credit cards, he has $10,000 worth of that, $2500 in a past-due gas bill, $1000 in a past-due water bill and then those mortgage arrears of $25,000.

Since he has the $25,000 sitting in a savings account, Chapter 7 is not going to be an option for him.  However, we can do a Chapter 13 and hope that the mortgage company goes through foreclosure and doesn’t seek a personal deficiency judgment against the debtor.  If there is no personal deficiency judgment, then we are only looking at the credit cards in the minor gas and water bill.  That would be a relatively quick Chapter 13.  I’m estimating a plan payment of approximately $300 per month.  He will need one plan payment before we file the case in the plan payments will come out of his payroll in the nature of a payroll control order.  Since he is paid twice a month, the plan payment will be broken into half approximately $150 deducted per pay period.

 

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