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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My employer cut overtime 1st of the year resulting in over

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My employer cut overtime 1st of the year resulting in over $1000/mo net pay and am due to lose $1592/mo in soc sec benefits for my 18 yr old HS senior in May. I will have approx $700 more per month in debts than I earn. I live in NM. I am 57 yrs old w/no 401K or retirement due to 2 employers filing BK and not paying me in the past 5 years. I looked into credit counseling but will be 62 by the time it's completed. Is CCC an option or should I file a Chapter 7? How do the new BK laws affect this type of situation?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.

Hi JACustomer,

1) How many are in your household?

2) What is the current total gross yearly household income?

3) If you own a home, a) what is the current market value, and b) what is the balance on the mortgage?

4) If you own a car, a) what is the current market value, and b) what is the balance - if any - on the car loan?

Customer: replied 6 years ago.
2 in the household; my gross income $60,000. Net is $3879/month. $132,000 balance on 1st; $49,000 balance on 2nd. Current market is approx $180,000. Car is 2005 Ford Freestyle due to be paid in full August. No idea of market value. According to CCC figures currently $991 in the red now each month. I will lose $1592 in soc sec benefits in May.
Expert:  cfortunato replied 6 years ago.

You said your employer reduced your salary.

1) Is $60,000 the new amount?

2) Do your have any extraordinary bills, such as for medical expenses?

Customer: replied 6 years ago.

$60,000 base pay. w2 2010 was $73,000. Overtime has been cut.


No extraordinary bills. No use of credit; have been paying on them for years. Creditors raised interest rates, closed accts and raised min mo pays. Soc sec benefits now paid to my daughter; she's currently keeping $600 of the $1592 which resulted in running behind Oct of last year. That entire amount will end May 2011.

Expert:  cfortunato replied 6 years ago.

Given the information you provided, you would qualify to file a Chapter 13 Bankruptcy (your income is too high for a Chapter 7). A Chapter 13 works similarly to a CCC, but is much better.

You would have to pay all disposable income (the amount left over after allowable expenses) to the Bankruptcy court for 5 years. At the end of the 5 years, the balance of all unsecured debts (eg. credit cards) can be discharged.

The reason a Bankruptcy is better than a CCC is with a CCC there is no guarantee that there will be no more debt after 5 years, and there is usually at least one creditor who refuses to participate, leaving at least one debt open at the end. This cannot happen with a Bankruptcy, where creditors have to choice, and must accept the program.

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