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The Divorce
Over 35% of all Chapter 7's are the result of such break ups.
Bobby and Sue had been married for 11 years and had three children. Bobby was employed as a truck driver and earned a net income of $1,700 per month. Sue was not employed outside the home because she was working full time caring for their three children, Marcie, Shari, and Bobby Jr., ages 2, 5, and Sue. After the parties separated, Sue filed for both child support and wife support and received an order of $800 per month from Bobby's income. Therefore, as a result, Sue's total income was $800 per month while Bobby's slumped to $900 a month.
Yet, even with their severely reduced incomes, they still each had a rent payment of approximately $400 per month plus utility bills, food bills and other living expenses. While they had been living together, they had been able to make ends meet with enough money left over to also pay their unsecured creditors. But, following their separation, their living expenses consumed nearly all of their net income, leaving literally nothing to pay toward their credit cards, personal loans and unpaid utility bills. Thus, their creditors began calling relentlessly, and one of the creditors actually sued both of them for the collection of the debt.
By the time they finally even considered the option of bankruptcy, the suing creditor had been awarded a judgment and had moved quickly on scheduling a Sheriff's Sale on the sale of their furniture. They made their move four days short of scheduled date for the Sheriff's Sale. A Chapter 7 Bankruptcy Petition was filed for both parties in which they were able to file jointly, because their divorce had not yet been granted.
By filing the Chapter 7 Bankruptcy, the Sheriff's Sale was brought to a permanent halt, and their possessions were saved. They were also able to eliminate all of the unsecured debts, such as charge cards, personal loan obligations, and back utility bills. Following the bankruptcy they had no debt and were able to go their separate ways, consummate the divorce and not have to pay back a single unsecured creditor.
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