Chapter 13 Bankruptcy – Part I: A Case Study
Today I provided a free legal consult to an impressive gentleman. This man has been working aggressively for the last three years to pay off his debts. He has done everything he knew possible to accomplish this goal. First, he adjusted his budget to stop borrowing. Then he adjusted his budget to start paying down his credit card debts. Unfortunately, his wife got sick and the medical bills started accumulating. Amidst this crisis, he could not survive on his income alone. He was forced to use his credit cards again. His wife never fully recovered (in fact she is still sick) but he was able to adjust his budget yet again so he could stop having to use credit cards. Shortly thereafter, his circumstances took another nose dive. He was forced to take a pay cut and his creditors would not work with him to provide him any relief on the payments. Nevertheless he continued to put up a fight even Dave Ramsey would be proud of.
At the time he saw me, he was still up to date on his credit cards, but he was paying $1,500.00 a month and selling all of his wife’s jewelry, the camera, and every other expendable property item in the house just to do it. Many people, including his creditors, encouraged him to do “debt consolidation.” As he looked into it, he realized that it would not help him. He would end up paying more money to the consolidation company without any protection or guarantee that the debts would be settled.
More significantly, he would be stuck on the meager budget he created for himself and his wife during the last three years of trying to pay off the debt. I told him he could get substantial relief through a chapter 13 bankruptcy. Not only would he be free from the harassment from creditors and force them into accepting a payment he could more comfortably manage, he would be able to loosen his belt on his budget as well.
This man had foregone health insurance and life insurance for himself. He put off repairing his A/C in his car for three summers because he did not have the extra money. He even put off repairing his septic tank because he couldn’t afford to while continuing to satisfy the rigorous demands of his creditors.
However, in a chapter 13 bankruptcy he would be able to purchase health and life insurance for himself. He would be able to repair the A/C in his car as well as the septic tank. These all would be considered reasonable and necessary expenses in a chapter 13 bankruptcy and therefore would be included in his budget before determining how much he would pay to his creditors.
When all was said and done, we determined that he would still be paying his creditors, but it would be much less than the $1,500 per month he was previously, leaving he and his wife more money to live a more satisfying quality of life.
We offer a FREE consultation, where we can discuss how to help reduce your debt. Call JacksonWhite today to speak with an experienced Arizona bankruptcy attorney. (480) 648-8975