Chapter 7 Is Your Best Bet

This is a case of Mark and Susan Sheridan who come to me for a Chapter 13 bankruptcy consultation.  They reside in Buffalo Grove Illinois, which is Cook County Illinois.  They have never filed for bankruptcy before.  In terms of real estate property, they own a home with approximate value of $220,000 and they owe $240,000 to Chase.  They are up-to-date on their mortgage.  They are not renting from anybody and nobody is renting from them.  They have a 2000 Dodge Intrepid vehicle which is paid in full.  They have a 1999 Dodge Stratus which is paid in full.  And they have a 1999 Chevrolet Cavalier which is also paid in full.  So they have three vehicles with the approximate value of the vehicles combined is less than $5000.

In terms of personal property, they have a checking account at Bank of America with $250 on account.  They have household goods worth $3000.  They have clothing worth approximately $2000.  And they have some expensive furs and jewelry worth approximately $15,000.  They do not have any 401(k) or retirement.  They do not have any life insurance.  They do not expect to inherit any money in the next six months.  The couple has a 21-year-old son who is living out-of-state and drives one of those vehicles.  So they basically have a two-person household.

Husband is working as a teacher in the Round Lake Area School District and he has been doing that for eight years.  Wife is working for North American Corporation as a senior collection representative.  She has been working at her job for 10 years.  Between the two, they bring in $102,000 per year which equates to approximately net income of $6067.  If we look at their monthly expenses which are their mortgage, taxes, insurance, food, clothing, laundry, medical, gasoline, recreation, charity, auto insurance and child’s tuition, they have approximately $5900 going out.  So this couple is really at the border of what they are bringing in and what they are spending.  It pretty much equates to zero net available.

In terms of debt, let’s look at what they have in this couple has done a great job of itemizing what they have.  They have North Shore University Health Systems for $3400, Exxon Mobil for $2900, Office Depot for $1000, Chase $815, Shell $1851, another Chase for $20,000, another Chase for $36,000, American Express $18,000, Men’s Warehouse $500 and Bank of America $23,000.  So when you add up all of the credit card debt, it can be very substantial here.  So Chapter 7 would be a good way to go if possible.  If we have to do a Chapter 13, you are looking at a pretty high payment plan because you’ve got $110,000 or more in credit card debt.

What we are going to do in this case is we are going to look at the paycheck stubs.  We’re going to program them into the bankruptcy software and then we’re going to look at the expenses in the debt and determine whether or not the computer advises whether or not there’s money available per month.  In my estimation, there will not be money available per month but I want to make sure that they pass the means test to be able to file for Chapter 7.  If they are able to file for Chapter 7, they will be able to eliminate all of their credit card debt and they will be able to keep whatever property they have.  There may be an issue with the expensive furs and jewelry that were going to want to have those valued because sometimes the clients think it’s worth something when in fact it might be worth much less in reality.  So for Mark and Susan Sheridan from Buffalo Grove, Illinois, Chapter 7 is going to be my recommendation unless the numbers in the software determine otherwise.



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