When people think of seeing a Bankruptcy Attorney, they think of failure. Failure to manage money, failure of a business, failure because they can’t pay their mortgage or medical bills. In reality, Bankruptcy can be a success story. Here’s one real-life family’s Bankruptcy Success Story:
A True Working Class Suburban Family
In May of 2018, I filed a Chapter 7 Bankruptcy for a Husband and Wife from the South Suburbs of Chicago. The Husband is a Union Iron Worker and the Wife owned a Trucking dispatch company. The husband also owned a trucking parts business. They have 4 kids, ranging from ages 18 all the way down to age 6. They own a modest house with a $180,000.00 mortgage, payments are $1550.00 per month. And the Husband earns about $6200 per month after taxes. They are leasing a 2016 VW for $555.00 per month and are financing a 2016 Ford for $335.00 per month. So far so good, right?
Businesses Go Bad
Here’s where the family’s financial picture unravels: Because of an economy turned bad, the truck parts business suffered. Sales went down, and the business wasn’t enough to pay for the warehouse lease. The business was sued by a family member in a dispute, and it also falls behind paying suppliers. The landlord sues, and the parts business had to close in 2015. The wife’s dispatch company is also faltering. The owners, my clients, still trying to pay for their personal mortgage and car payments along with food and utilities, use their credit cards to make up the difference. The lawsuits hit, and they have no way to pay to defend the lawsuits, make credit card payments, along with all of the necessities to support their family. Now they are faced with over $150,000.00 in debt on top of their mortgage and car payments. The majority of the debt is the business-related debt- the remainder of the business lease, suppliers and other lawsuit. Keep in mind that they had to guarantee most of the business debts personally. So, just closing the businesses does not end their problems.
First Step to Success- Get Protected
They filed Chapter 7 Bankruptcy, and were able to start over.
In the Bankruptcy process, this couple completed 2 credit counseling courses, and provided all of their financial information to their attorney and The Bankruptcy Trustee: 4 years of Business and Personal Tax Returns, pay stubs, and bank statements for several months. They went to a Court hearing where the Bankruptcy Trustee reviewed everything with them, and found out what happened in their financial life. Then, 4 months later, the Bankruptcy proceeding concluded. They received a Discharge of their debts.
Bankruptcy Helps Start the Healing
This couple eliminated their personal liability for the business landlord’s and the other lawsuit. They eliminated the credit card debt from trying to survive and keep their business running. They were able to move past this very rough time, and go forward. They continued to make their mortgage and car payments and kept their cars and house. But, importantly, they shed the burden of both business and personal debt that was caused by the failing businesses. They are now able to provide for their family. Their credit score dipped, and they can begin rebuilding their credit, to have a less stressful, productive path forward.
How is this a Success Story? Here is an example of a family on the brink of disaster, with severe financial problems. They were faced with lawsuits and Court Judgments. After a Court Judgment, they would have been faced with wage garnishments for years to come, taking money from the Husband’s paychecks. Instead, they are able to move past the closed businesses, and work to support their family. Instead of financial ruin for decades, they can rebuild and move on- without fear and stress that these huge financial problems could have caused. But, they were able to protect and keep their house and 2 cars, provided they continued to make those payments.
This is Success. I helped them by filing a personal Chapter 7 Bankruptcy. The Bankruptcy helped by taking a bad situation, and ending it. Limiting the damage, and going forward with much more peace of mind. If you make lemonade from lemons, that’s a success. Call us, we can help.
Daniel J Winter