Case Set-Up
This is the bankruptcy case study for Darius from Chicago, Illinois who was in my office to determine whether or not chapter 7 or chapter 13 will help him. He currently resides in Chicago and he has a spouse who will not be filing with him. He has filed a chapter 13 bankruptcy in the past which was not successful. In terms of real estate, he owns a single-family home which he wishes to surrender. The house is worth $150,000 and he owes $210,000 on the home. He has not made a mortgage payment in several months and realizes that the best thing to do would be to let the house go into foreclosure and eliminate that debt through bankruptcy. In terms of vehicles, he has a 2013 Chevy Malibu which is worth $20,000 and financed to the amount of $20,000. Despite the fact that he does not have negative equity in the vehicle, he wishes to surrender it in exchange for getting a complete fresh start.
Property
In terms of personal property, he really doesn’t have much. He has normal clothing valued at $400 and minor household goods valued at $1000. He does not have a checking or savings account. He has no retirement benefit account. He has no life insurance. And he has no other property of any significant value. He is currently married with four dependent children all under the age of 14. He has been working on a temporary basis for the last two months earning approximately $1200 per month. When we factor in his monthly expenses, they completely offset his income. This is true even despite the fact that he is not making the mortgage payment or the care payment at the moment.
Financial Affairs
In terms of his statement of financial affairs, he has made $20,000 and $30,000 in the last two years respectively. However he seems to be only able to get temporary work at the moment. He has had some problem with bank accounts as he has needed to close a checking account at two different banks in the last year. Looking over his debts, he has $800 in credit cards, $2000 in medical bills, $3000 in payday loans, and $10,000 in tollway violations.
Recomendation
My recommendation for Darius from Chicago would be to file a chapter 7 bankruptcy case to eliminate his miscellaneous debt. He may be able to dispute the debt owed to the Illinois tollway because he claims those are not his vehicles getting ticketed. In terms of income and expenses, there is simply no available money to work out a repayment plan under chapter 13. For this reason I strongly recommend a chapter 7 fresh start. He can give up the real estate and give up the car and get completely out from under those long-term obligations.
