Eliminate The Credit Card Debt Through Bankruptcy Filing

This is the case of Ms. Corey Felton who was in my office to see me about debt relief whether it be Chapter 7 or Chapter 13.  Corey resides on Waverly Place in Joliet, Illinois which is Will County, Illinois.  She filed a Chapter 7 bankruptcy back in 2001 so it’s been more than eight years.  She is able to file another bankruptcy case if she so chooses.  She does not own any real estate.  She is currently renting.  Her landlord has got her under a month to month lease.

 She does not have a vehicle in her name.  She is using a vehicle that is currently in her father’s name so she has no equity in that vehicle.  In terms of personal property, she has a checking account at TCF Bank and she also has a savings account at a credit union.  The checking account I must note is $-750.  She has a security deposit of $900 on hand.  She has household goods worth $400.  Her clothing is valued at $1000.  She believes she has a life insurance policy with a death benefit only.  She has an IRA with $300 in it and she had a 401(k) but she cashed it all out.  In terms of child support, she receives $1750 a month.

 She is divorced and she has four minor children ranging from ages 3 to 14.  She is currently employed as a physical therapist and she earns approximately $32,000 per year.  When you take in consideration her income from her job as well as her child support, she is bringing in anywhere from approximately $4000 per month net.  Let’s look at her all-important expenses now.

 She has rent at $900, garbage and trash $109, electricity and gas $250, home phone a, cell phone $200, cable TV $280.  She might be able to make an adjustment on that budget wise.  Internet $100, food $600, $400 for clothing which includes her children’s school uniforms; $900 for laundry and dry cleaning, $300 a month for medical and dental, $250 a month for gas, tools and mass transportation, $200 a month for recreation, $350 for out-of-pocket medical, $400 for medical insurance, $50 for life insurance and the child care tuition at $1400 per month.  Her expenses are exceeding her $4000 income by approximately $2500.  So every month she is going into the negative and we haven’t even talked about the minimum that she is paying on the credit cards.

 In terms of her financial affairs, she earned approximately $20,000-$25,000 over the last three years.  Things were looking a lot better when she was married and had the dual income of her spouse but since the divorce, it’s been a struggle.  She has been sued by some of the credit card companies.  She has had two prior addresses, both in Joliet within the last four years.  She has not sold any real estate.  She does not own a business.  There are no co-debtors, there are no significant student loans and there is no income tax debt. 

 The big problem here for Corey is the credit card debt at $40,000 and the inability to make any significant headway based on the fact that she has less coming in than what’s going out.  So this is a straightforward, strong recommendation for Corey Felton to do a Chapter 7 and get a fresh start.  Chapter 7 will allow her to at least eliminate the credit card debt and be able to try and budget properly in the future to be able to make ends meet.  Corey Felton, from Joliet Illinois, Chapter 7 is my recommendation.

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