Chapter 13 Would Include The Car Payment

This is the case of Monique Thomas who lives in Chicago, Illinois, Cook County regarding Chapter 7 bankruptcy.  She lives on South Parnell Street in an apartment and she lives with her children.  Ms. Thomas has never filed for bankruptcy before.  She is not a homeowner, she is a renter.  She is renting on a month-to-month basis from a woman in Chicago.  She does own a vehicle, a 2004 Pontiac Grand Pre which is financed by Turner Acceptance and she owes $8000 on that vehicle and she pays $288 per month in payments.  She also has a 2006 GMC Envoy which is financed by West Lake.  $10,000 is owed on that vehicle and she pays approximately $375 per month and she is current on both vehicles.

In terms of her personal property, she has a security deposit with the landlord of approximately $400.  She’s got minor household goods worth $300 and minor clothing worth $300.  She does not have any life insurance.  She does not have any retirement account whatsoever.  She has no stocks, no bonds.  She cannot sue anybody for any personal injury or workers compensation and she has no animals.  She is currently single and she has four children living on the property ages 16, 15, 10 and seven; two sons and two daughters.  She is currently not working.

In terms of monthly income, she has Social Security $710 per month.  She receives child support of $181 per month.  And she has food stamps or the Link Card as they call it today for $606.  So she has very little coming in between those three sources.  In terms of going out, her rent is only $171; she is on a special program with rent.  She’s got electric and gas, $80 per month; telephone $155 per month, cable television at $90 per month, normal food, normal clothing expenses, and transportation pretty low at $150 per month.  She does pay $130 in auto insurance and then she’s got the two auto payments that I talked about earlier.

In terms of her Statement of Financial Affairs, she was garnished from State Farm in the last year.  She has been at the same address for at least two years.  She has not worked a job in the last three years but she does have the income from child support and Social Security which total approximately $11,000 per year.  There are no co-debtors, she does not owe any student loans and she does not owe any tax debt.

In terms of her actual debt, she has got the cars which amount to $20,000 worth of debt, she’s got parking tickets of $5700 and she’s got a credit card judgment from the past of about $9400.  In this circumstance, if she were to do a Chapter 7, the only debt that would really be eliminated is the judgment for $9400.  She would still owe the parking tickets and she would still owe the $20,000 in cars provided she wants to keep those cars.

My recommendation would be a Chapter 13; the approximate monthly payment would be $425 per month.  By filing Chapter 13, she would not make a regular car payment anymore.  Her car payments would be part of the Chapter 13 consolidated payment.  She would also be paying a percentage on the dollar for the parking tickets and for the judgment.  The beauty of a Chapter 13 here is that not only is she paying for her cars through the 13, she is going to discharge whatever amount was not paid on the parking tickets provided she completes a plan.  So I would recommend a Chapter 13 at 10% to eliminate the parking ticket debt, the judgment debt and allow her to keep making payments through the 13 for the use of her vehicles.



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