Unable to work due to a sevre medical condition, she had accumulated $30,000 in credit card debt. Still not working years later, she just cannot make the minimum monthly payments totaling about $800 per month.
Her good friend, a former bankruptcy client, brought her in for a free consultation.
I quickly saw the risk that she did not recognize. As the sole owner of the house, which she had inherited from her parents, she had no mortage (good because it kept her living costs down; but bad, because her New York homestead exemption was limited to $165,500, and the house was worth over $500,000). In other words, if she filed a chapter 7 bankruptcy petition, her bankruptcy trusee woud sell the house to pay her credit cards!
After she overcome her initial shock, I counseled her on managing her life without the need for bankruptcy, and showed her how her current income would be enough to pay her current expenses.
I also reminded her how lucky she was that she had a nice place to live; that she did not have to sell her house; that she had enough money to make ends meet; and the reasons she should not be worried about the bill collectors.