This is the bankruptcy case study for Tiffany from Gurnee, Illinois. She was in the office to determine whether or not she can qualify for a chapter 7 bankruptcy. Here are the details from her intake: she is the owner of a single-family home with a market value of $197,000. She owes approximately $180,000 to pay off the first mortgage lien which is owed to Chase. The monthly payment is $1700 and she is current with her mortgage loan. She also indicated that there may be a creditor judgment lien against the property so we will investigate that at a later date. She is not renting from anybody and nobody is renting from her. She does not own a vehicle. She has a checking account at Harris Bank and no savings account. She has household goods valued at $1000, clothing valued at $200, a 401(k) rollover account valued at $14,000, corporate bonds valued at $200 and domestic pets which she values at $150.
She is currently married with a dependent child age 9. She is working as a set manager and has been working in that capacity for the past five years. Her husband is a seasonal worker and he has been working in that capacity for the past two years. In terms of household income, the parties are bringing in a combined $4200 per month. Looking to their expenses, they pay $1700 for their mortgage. Electricity and gas is $100, home phone is $20, cellular phone is $100, cable TV is $110, food is $500, laundry is $20, transportation expenses are $200, auto insurance is $50, child care is $200, and husband’s auto payment is $605. When we look at their income minus their expenses, it appears they do not have the ability to repay their debts over time. Thus, she would qualify for chapter 7 fresh start bankruptcy relief.
In terms of debts, she has approximately 8 credit cards totaling $65,000. In addition to the credit cards, she has outstanding medical bills totaling $4000. She also made the mistake of obtaining a payday loan in which she owes $750. She also has an amount owed to a family member for $1500. The benefit of filing a chapter 7 this case is that the credit card debt, medical debt and payday loan would be eliminated instantly. She can then repay a family member in the future if she so chooses. Her house is protected since there is very little in the way of equity and she has no vehicle at all.
In summary, my recommendation to Tiffany, from Gurnee, Illinois would be to file an individual chapter 7 bankruptcy. Her spouse does not need to be part of the filing as the debts are exclusively in her name. By filing a chapter 7 to eliminate the miscellaneous credit card debt, medical debt and payday loan, she will be able to pay for her monthly expenses without issue. If she does not choose to file, the high interest credit card debt will continue to accrue.
