The Case Tilts Toward A Chapter 7 Bankruptcy Filing

This is the case of William Forte, who comes to see me from Great Lakes, Illinois which is Lake County, Illinois regarding a Chapter 7 bankruptcy petition.  He did file a bankruptcy back in 1999 under Chapter 7.  It’s been over eight years so he is eligible to file again.  He does not own a home.  He is renting and he is on a yearly lease which expires in December.  He has a vehicle debt, a 2010 Honda Accord financed through Honda Financing.  He owes approximately $18,000 on the vehicle and he pays $480 per month for the vehicle.

In terms of personal property, he has a checking and savings account with Armed Forces Bank approximate balance $600.  He has minor household goods worth approximately $2000 and normal clothing with approximately $500.  His life insurance is death benefit only.  He has a 401(k) worth $5000 and he has no other personal property.  He is married and he has two minor children, a 10-year-old and a five-year-old son.  He is working for the US Army in the Human Resource Department and his wife is a housewife, taking care of the children.  In terms of monthly income, he has $6300 coming in per month.  In terms of debt, he has $1600 in rent, $250 a month for a cell phone bill, $150 per month for cable, food; he’s got approximately $1400 which is a little bit high for a family of four.  Gas $240 for transportation.  $150 for medical and then he has auto insurance, his auto payment and his military Star Card which is approximately $560 per month.

In terms of debt, he has a student loan with approximate balance of $30,000 and then he has two different forms of tax debt.  He’s got state of Pennsylvania from 2010 for $1600 and he has federal tax debt owed to the IRS from 2011 in the amount of approximately $1500.  In terms of other debt, he is looking at credit cards, mostly credit cards, a little bit in medical but mostly credit cards, a little bit of furniture totaling of approximately $45,000.

In this case, I would recommend a Chapter 7 if the budget items which are income minus expenses show an inability to repay the debt over time.  So this is one of those cases where because his income is a little high, we want to make sure that he qualifies by putting all the numbers into the bankruptcy software.  If we can determine that he does not have the ability to repay his debt and he passes the means test, then Chapter 7 would be my recommendation.  A lot of his debt is dischargeable so it would definitely help him to eliminate the dischargeable debt and then only owe for the student loan and the tax debt.

If, on the other hand, the numbers show that he has the ability to repay a small percentage over time, then we will likely recommend 13.  In either event, he is going to lose his credit cards, he’s going to get on a budget which will help him either going forward after Chapter 7 or to survive a Chapter 13.  So William Forte, out of Great Lakes, Illinois; we are going to see what we can do but I’m leaning towards Chapter 7 for you if the numbers provide it.


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