This is the bankruptcy case study for Romero who resides in Worth, Illinois. He is currently separated from his wife and is seeking advice on chapter 7, fresh start bankruptcy. He is the owner of a single-family home with a current market value of $150,000. The outstanding debt owed to Citi mortgage totals $214,000. Thus, right off the bat we see an individual who is significantly upside down on his real estate property. In addition to being upside down, he is $6500 in arrears. In terms of vehicles, he has a 2011 Cadillac which is financed and he owes approximately $24,000. There is little equity in the Cadillac. He also co-owns a 2006 Ford Explorer which is paid in full which has a value of approximately $2000.
In terms of other property and assets, he has a checking and a savings account at Chase bank with a balance of approximately $600. He also has a savings account through the credit union with a value of approximately $500. He has minor household goods, normal clothing, death benefit only life insurance, and a 401(k) which has a nice value of $60,000. He also has two dogs and one cat which are priceless.
In terms of his family situation, as I mentioned earlier, he is currently separated with two minor children ages 14 and 17. In terms of employment, he is working as a manager and has been working in that capacity for the last 19 years for the same company earning approximately $61,000 per year. He also has a part-time job which adds an additional $400 per month. In terms of monthly expenses, he has the mortgage payment of $1700, home maintenance at $300, water and $60, electricity and $200, cellular phone at $120, cable television at $140, food at $400, clothing at $200, medical and dental $200, gasoline and transportation $150, charity at $25, auto insurance at $157, life insurance and $72, automobile payment at $460, IRS installment $100, and fitness club and $20.
Since his income does not exceed his expenses, he would not be forced into a chapter 13 repayment plan. He more likely will fit into a chapter 7 fresh start which is exactly what he was hoping for. By filing chapter 7 bankruptcy, he can eliminate the approximate $5500 in credit card debt as well as eliminate the liability on the outstanding mortgage. This does not mean that he will be able to keep the house. In fact, if he does not get current on his mortgage he will likely lose the property to foreclosure. However by filing chapter 7, the mortgage lender will only be able to recover the property and will not be able to seek any kind of the deficiency or dollar amount from the debtor.
My recommendation this case is a chapter 7 fresh start to eliminate the debt and to start saving.
