This is the chapter 13 bankruptcy case study for a gentleman who lives in Chicago, Illinois. He is currently divorced and is seeking protection under chapter 13 of the bankruptcy code. He has never filed a bankruptcy case before. He is not a homeowner. He is currently renting on a yearly lease which expires in April. He owns a 2011 Toyota Prius which is financed through Bank of America. The balance owed on the vehicle is $19,000 and his current monthly payment is $550. He is up to date on that payment so we are going to have to make a decision whether or not to include it in the chapter 13 repayment plan.
Personal Property:
In terms of personal property, he has a checking account and a savings account with an approximate balance of 2500 total. He has minor household goods including TV, furniture, clothing and assorted items valued at $3000. He has a term life insurance policy which provides for a death benefit only. He has a 401(k) retirement account which has $1500 in it. He is currently divorced with no dependent children. He is working as a manager for the past four months earning approximately $105,000 per year.
Income:
When we look at is income juxtaposed to his expenses, we see that he does have significant available income per month anywhere from $800-$1250. He accrued a large amount of credit card debt while he was unemployed for the majority of the prior year. In fact, he has approximately $50,000 worth of credit card debt in addition to his auto debt of approximately $19,000. His statement of financial affairs shows that he does have the ability to make anywhere from 65,000 to 105,000 if he can stay employed. He has had two prior addresses in the last four years, one in Chicago and another in Waukegan. He does not have any co-signers on his debt, he does not owe for any student loans and he does not owe any tax debt. Once again, the major thrust of his debt is the credit card debt.
Pay Off Credit Cards In A Chapter 13 Bankruptcy
What I would recommend in this chapter 13 bankruptcy case scenario is a repayment plan of the credit card debt only. I would pay the car separately as the debtor is current and up-to-date on that payment. He should not have to pay a Trustee fee for an auto that he is current on. I would take the $50,000 outstanding credit card debt, plus whatever attorney’s fees and trustee’s fees he’s going to have to pay and do so over a 60 month period. When we do the calculation, he would be looking at a payment plan of anywhere from $960 up to $1020 per month.
Thus, chapter 13 is a viable option for this gentleman provided he can stay employed and stay healthy. He will have to curb his credit card usage as he seems to resort to this type of credit whenever he gets in a bind. For more information on chapter 13 and how you could be helped, you can contact the office at 847-520-8100.
