This is the chapter 13 bankruptcy case study for Mr. Barry who resides in Plainfield, Illinois. He is currently a homeowner. His home is valued at $142,000.00. He has one mortgage with an outstanding balance of $126,000. His monthly payment is $1137 and he is past due on his mortgage by $4000. He wishes to keep the home so he is seeking chapter 13 bankruptcy protection to allow for the restructuring of his mortgage arrearag. This property is also a condo and the Association fee is $195 per month and he is behind $215 on that payment. We’re going to determine whether or not he has the income available to make a regular mortgage payment and put something towards the arrearage.
In terms of vehicles, he owns a 2013 Cadillac which is financed by Ally Bank. The outstanding balance on the vehicle is $30,000, the value of the vehicle is $30,000 and he is behind on his payment by two months. He also has a second Cadillac, a 2011 which is financed by Santander. The debt on the vehicle is $26,000 and the amount owed to pay off Santander is $20,000. The monthly payment is $420 per month and he is current on that vehicle. Since he is a single man, I’m going to recommend that he surrender the 2013 vehicle that he is behind on. He does not need two vehicles for reorganization purposes.
In terms of personal property, he has a checking and savings account at Chase bank. He has household goods which he values at $1900. He has normal clothing which he values at $800. He has a term life insurance with a death benefit only. He has no retirement accounts, does not expect to inherit any money, has no lawsuits pending in his favor, and has no other property whatsoever. As I mentioned, he is single with no dependent children. He has been working for the past 40 years as a forklift driver. His income averages $65,000 per year which equates to $3700 net take-home pay. In terms of monthly expenses, his mortgage is $1137, Association is $195, electricity and gas is $250, telephone is $80, cable TV is $140, food is $450, clothing is $50, laundry is $50, medical expenses are $10, transportation costs are $350, health insurance is $216, auto insurance is $105, and the auto payment would be wrapped into the chapter 13 reorganization plan so we will not include it in his monthly expenses.
In terms of debt, he has approximately $25,000 in credit card debt in addition to the mortgage arrearages and his car payment. What I would propose is a chapter 13 monthly payment of anywhere from $800-$1000 per month. This would include his car payment so he will not be making a separate payment on that item. He does need to make his regular first mortgage payment on time after the case is filed and then submit anywhere from $800 – $1,000 per month to a chapter 13 trustee over a 60 month period. This will allow for the restructuring of the mortgage arrearages and payment of the vehicle.
Thus, my strong recommendation for Mr. Barry from Plainfield, Illinois would be a chapter 13 reorganization case. Please keep in mind that this reorganization would also include the surrendering of the second Cadillac which is unnecessary for someone in his situation who is trying to save a home.
