This is the chapter 7 bankruptcy case study for T. L. Who resides in Gurnee, Illinois. She comes to me with a request to find out whether or not chapter 7 bankruptcy will help eliminate her particular debt. Let’s first examine her financial situation. She does not own any real estate. She is currently renting on a yearly lease which expires in July. She owns a 2007 Chevy Aveo which is financed by Blackhawk Financial. The vehicle has a current market value of $5000 and an outstanding debt of $2500. Her monthly payment on the vehicle is $353 and she is current. She would like to keep that vehicle and reaffirm the debt on it. In terms of personal property, she has a checking account at Chase Bank, normal household items valued at $1000, clothing valued at $3000, a tax refund expected in the amount of $1000 and a domestic pet valued at $50.
She is currently single and she is working for the past 10 months in Vernon Hills, Illinois. She is paid every other week and nets approximately $1516 every month. She has no other income from any other source and she does not expect any significant change of more than 10% in the next six months to a year. In terms of monthly expenses, she is contributing $750 for rent, $75 for electricity, $90 for cellular telephone, $200 for transportation expenses, $75 for auto insurance, $353 for her auto payment and $150 for miscellaneous personal expenses.
In terms of her statement of finances, she is earning approximately 15,000 to 17,000 every year for the past three years. She has not received any unemployment or workers compensation or other source of income over the past three years. She is not currently being sued by a creditor, she has not had any property repossessed in the last year, she has not closed a checking or savings account in the last year, she does not have a safety deposit box and she has not owned her own business in the last year. She has had two prior residences within the past two years, one in Champaign, Illinois and one in Urbana, Illinois. She has two co-debtors: one with regard to her outstanding student loan and the other with regard to her vehicle.
In terms of student loans, she owes approximately $15,000 to the department of education. She has no tax debt either state or federal, and she does not owe for any support. The issue in this case is that her driver’s license is suspended due to an auto accident without insurance. She also has a payday loan, multiple evictions, outstanding parking tickets, and past-due utility bills. The plan for this client is as follows:
I would strongly recommend a chapter 7 bankruptcy filing. Chapter 7 will allow for the elimination of the debt owed to everyone except for the car which she continues to pay as well as her student loans which are non-dischargeable. The debt owed to her auto accident without insurance will be eliminated and her license will be unsuspended provided she can show proof of financial responsibility insurance. Her prior evictions, her payday loans, and her electric and medical bills will be eliminated in a chapter 7 fresh start bankruptcy. Her case will involve one meeting where she has to appear before a chapter 7 trustee to answer questions under oath with regard to her income, assets, expenses, and liabilities. The trustee will likely find that there are no assets to administer and she will be granted a fresh start bankruptcy.
