Suite 2800, Gulf Tower
Pittsburgh, PA 15219
412-391-8000
1-800-360-9392
Gloria - A Typical Chapter 7
Gloria was a 31 year old waitress who had held several jobs during the previous ten years. She rented her apartment and had a car payment of $350 per month. Beyond that she had two personal loans outstanding and seven different charge cards to stores and banks. She had managed to keep her car payments current, and her rent was also current; however, she had fallen behind on all but one of the credit cards and on one of her two personal loans. Creditors began calling her about the delinquencies. For at that time, she was just not making enough money to cover her living expenses, such as rent, car payment, food, clothing, utilities, and still make the required monthly payments on these outstanding debts. In a nutshell, she had simply managed to charge more than she was able to repay, and her credit on most of the accounts had been suspended.
Gloria had several alternatives. Her first alternative was to work with her creditors by calling them up, explaining her situation, and then attempting to work out a more suitable repayment arrangement, which she had already attempted with no success when she began considering bankruptcy. Her second alternative was to seek help from a consumer credit counseling company service, such as an organization that contacts one's creditors for you and tries to arrange for lower payments spread over longer periods of time. Such a counseling service, which is sometime founded and supported by a conglomeration of nationwide creditors, normally receives a low commission on all payments received. But Gloria was so overextended by the time she pursued this alternative, that it was doubtful that she would be able to even make the absolute minimum monthly payment arranged by such an organization.
Her third alternative was either a Chapter 7 or Chapter 13 bankruptcy. An assessment of her income and expenses was prepared, and it became clearly obvious that there was no money remaining in which to make a payment to the court for a Chapter 13 Plan. Thus a Chapter 7 became her only real feasible alternative.
The purpose of Chapter 7, as is true with all bankruptcies, is, as already mentioned, to give honest debtors a fresh start. By filing a Chapter 7, she would be allowed to retain possession of her car as long as she continued to make the car payments. She would also have to continue paying her rent payments and her utilities. All that would be cleared for her were her unsecured debts, charge cards, her personal loans, etc. As is often the case, she was concerned about her future credit, which a Chapter 7 would definitely have a negative impact. But since her credit had already been damaged by the fact that she had missed payments and had been late with other payments, and would remain so for the next seven years, her credit would probably not be made any worse. In addition, since she could not file bankruptcy again for eight years and she had no debt, there probably would be some creditors that might be willing to take a risk and lend her money or extend credit to her in the future.
Gloria decided to think about it, then decided to file a Chapter 7 a week later.
Click here to read more case histories.