You Can Continue To Pay The Mortgage In Chapter 7

This is the case of Guadalupe Sacramento who comes to me from Aurora, Illinois, Kane County, Illinois for a Chapter 7 bankruptcy consultation.  Waterloo Bay has never filed for bankruptcy before and she’s wondering how the process works.  In terms of real estate property, she does own a home worth approximately $35,000 and she owes $36,000 to Wells Fargo.  Thus, there is no equity in the home so Chapter 7 is still in play.  She is not renting from anybody and nobody is renting from her.  She does not own a motor vehicle, she uses public transportation.

She has a checking and savings account at Old Second Bank with an approximate balance on account of about $250.  Her household goods are valued at $4000.  She has $200 in clothing.  She has a life insurance with a death benefit only and she does have 401(k) and IRA of approximately $60,000.  She receives child support $100 per month and she does expect a small tax refund.  She has a timeshare which she values at $15,000 although it would be hard-pressed to get $15,000 from any timeshare.

She is divorced.  She has one minor child by the name of Jesse who lives with her.  She is currently unemployed at the present time.  The only income that she has coming in is the child support of $100 and food stamps of $360 totaling $460 for monthly income.  Her mortgages $550 so that eats up all of her available money.  She also has water and garbage, electric and gas, cellular phone, home phone, cable TV, food and groceries and life insurance.

In terms of her income over the last three years, she made nothing last year, nothing the year before and only $4500 this year.  So she is in trouble income wise.  By that I mean even when we eliminate the outstanding debt, she is still going to have a problem going forward because she doesn’t have the ability to make her current mortgage payment.

In terms of debt, she has a student loan with Sallie Mae of $8000.  She has no tax debt and there are no co-debtors.  She is the only one who owes on these debts.  Looking to the debts, we have Target, Discover, Bank of America, Citibank, Capital One, American Eagle, Lane Bryant, Disney, Sears, Wal-Mart, Best Buy; mostly credit card debt totaling $60,000.

Guadalupe’s case is a no-nonsense Chapter 7 wipe out the credit card debt, keep the property, try and get back on your feet type of case.  By filing Chapter 7, Guadalupe will be able to maintain her mortgage by continuing to make the monthly payment.  She will have eliminated the credit card debt and she will have the ability hopefully to find other sources of income to be able to support herself, her family and her property.  So Chapter 7 fresh start is the definite decision for Guadalupe Sacramento out of Aurora, Illinois.

 

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