If I Make a Good Income, Can I Still Benefit from Chapter 7?
Sam Walker, Chicago, Illinois: Chapter 7
Sam earns $4,100 a month as a retail sales associate. He occasionally receives bonus checks from his employer, but his monthly income is never higher than $4,500 a month. Sam rents an apartment in the Lakeview neighborhood on Chicago's North Side, owns a late-model Toyota, and has a rather large record collection. Sam has a 401k account through his employer with $75,000 in mutual fund assets, but does not own any stocks or other easily liquidated assets outside of his retirement accounts. Sam also has $50,000 in credit card debts.
One of Sam's credit card providers recently filed a lawsuit against him to collect the balance due on his account. Sam is a perfect candidate for a Chapter 7 bankruptcy. He is likely to pass the means test, and his personal possessions are protected by exemptions. Although Sam assigns a lot of value to his collection of obscure vinyl records, a Chapter 7 trustee likely will not. Filing a Chapter 7 bankruptcy will allow Sam to obliterate his credit card debts while keeping all of his belongings. It will also stop the pending lawsuit, preventing his creditor from obtaining a judgment against him and moving on to collection methods like wage garnishment.