This is the case of Matthew and Nichole Seton and who come to me for a bankruptcy consultation. They live in Elk Grove Village, Illinois which is Cook County, Illinois. They have never filed for bankruptcy before. They own a single-family home worth approximately $123,000 according to the website Zillow.com. But they owe $145,000 to the first mortgage and they also owe the association. And they have a second mortgage but they didn’t have the approximate dollar amount. But in any event, they are upside down on the home so Chapter7 would be available if they would otherwise qualify.
Their landlord, they are the landlord and they have family living with them but they don’t want to contact those people. They have a 2007 Mercury Milan worth approximately $7000 and it’s paid in full. In terms of other personal property, they have a checking and savings account at US Bank. They have $1000 worth of household goods and minor clothing worth approximately $1000. The husband has a life insurance policy, term policy with a death benefit only. The two of them have 401(k) and retirement totaling approximately $10,000 and they have no other personal assets. They have one child, a three-year-old daughter so it is a three-person household. He works as a youth counselor making approximately $38,000 per month. The wife works as a teacher making approximately $25,000 per year.
In terms of monthly income, net take-home they have approximately $2900 coming in plus they are receiving $1000 per month from a pension or retirement plan. In terms of debt, they are paying rent, that’s the $1100 per month and then they also have mortgage payments. So they have approximately $2200 going out per month. In terms of their Statement of Financial Affairs, they made approximately $72,000 together over the last couple of years. They have not been sued. They have not closed a bank account. They have not owned a business. They have not given away or sold anything for less than its fair market value. There are no co-debtors. There is no tax debt. There is however student loan debt, $9000 owed to Sallie Mae and $20,000 owed to direct loans. In terms of debt, we are talking about credit card debt of approximately $21,000 in medical debt of approximately $3000.
In this particular case, I would recommend a Chapter7 fresh start. We can’t eliminate the credit card debt. The parties can keep their home provided they continue to make their monthly payment since there is no equity and they can keep paying the student loan debt which is a non-dischargeable debt under either Chapter. So Chapter7 would be the answer here. It would provide a nice fresh start and give this couple a chance to start paying for some of their non-dischargeable debt and maybe even put a little bit more towards retirement in the future.
