Chapter 13 Is Possible With Extra Income

This is the case of Carla Salerno from Chicago, Illinois who is interested in filing for bankruptcy.  Ms. Salerno does not own any real estate.  She is currently renting from a landlord at the same address as her but on the second floor.  It is a month-to-month lease.  She does not own a vehicle.  She is not paying for a vehicle.  She is not using anybody’s vehicle.

She has a checking account at Citibank.  She has no savings account.  She has $560 on account with her landlord as a security deposit.  She has minor household goods worth approximately $400 and normal clothing worth approximately $400.  She has no IRA, 401(k), profit sharing or other retirement account.  She does not expect to receive a tax refund and she can’t sue anybody for any reason.

She is single and she has a dependent child who is two years old, her son.  She has been working the past two months as an office clerk earning approximately $15,000 per year.  When you take in the monthly income of $1062 per month in pocket as well as food stamps of $360, she has a total of approximately $1400 per month in pocket.

Let’s look at her monthly expenses.  The rent is $560 a month.  Electric and gas is $40 per month.  Cellular phone is $65 per month.  Cable telephone is $60, food is $360, clothing is $10, transportation is $92, auto insurance is $40 and child care tuition is $80 per month; roughly totaling $1300 per month.  So on its face, it looks like Ms. Salerno has approximately $100 available that can go towards her unsecured creditors.

But let’s see what kind of debt she has.  There are no student loans, there is no tax debt.  $9500 in parking and red light tickets, another $472 for traffic fines.  These are non-dischargeable debts that would not be eliminated in the Chapter 7.  So Ms. Salerno needs to find a way to do a Chapter 13 and pay off these parking tickets and red light violations and save her license.  I think she can do that but she is going to need a little bit of assistance because she only has approximately $100 per month which is not going to pay all of her debt over a 60 month period.  So Chapter 13 would be my recommendation if Ms. Salerno can get some additional help or additional income from a job.