Question

CHAPTER 9:

Steve (Slick) Willy, 45, just got out of jail. As a reformed citizen on parole, Slick decides to go into business for himself. He starts a collections company to help companies collect debts. The terms of his parole stipulate that he pay restitution payments to the federal government of $400 a month, or 10 percent of his income, whichever is greater. As his parole officer, you notice that after a year out of jail, Slick makes some interesting purchases. First, he buys a new Jaguar, which he drives to parole meetings.

Second, he moves into an expensive neighborhood on the north side of town and takes a cruise to Jamaica with his 19-year-old girlfriend. Yet, he has never been late making his $400 monthly payments to the federal government. After obtaining a subpoena for his bank records, you notice that he has only $1,000 in his account. About this time, you receive a call from a man who is making payments to Slick’s collection company. He states that Slick is threatening to break his legs and hurt his family if he doesn’t pay Slick’s company. The man says Slick demands the checks be made out to a woman, not a company.

This complaint convinces you to investigate Mr. Willy and his girlfriend. A search of UCC filings in the county shows that Slick’s girlfriend owns three cars costing a total of $85,000, a $360,000 house, and a company called Tak’It From You. You check her bank account and see that more than $45,000 is moving through the account each month. You decide to dig through Slick and his girlfriend’s trash a few times each month. In these searches, you find evidence that supports the following: three car payments totaling $2,000 per month; a $2,600 monthly mortgage payment; a credit card balance of $6,500, with $200 monthly payments; a balance of $13,500 owed to Home Shopping Network, with $600 monthly payments; $350 food payments during the past two weeks; and a $3,650 payment to Jamaican Cruise Lines. After searching the girlfriend’s trash, you talk to her neighbors, friends, and co-workers and determine that she and Slick spend between $1,500 and $2,500 a month on miscellaneous items and trips. One neighbor tells you that Slick just gave his girlfriend a diamond ring that cost $4,500. Slick’s girlfriend works as a waitress at a small restaurant and makes only $16,500 a year. (Note: Assume that both Slick and his girlfriend’s net worth last year were zero.)

Question: Use this information to prepare a net worth analysis of Slick’s girlfriend. (Ignore interest in your calculations.)

The Net Worth Calculation

1. Assets − Liabilities = Net Worth

2. Net Worth − Prior Year’s Net Worth = Net Worth
   Increase

3. Net Worth Increase + Living Expenses = Income

4. Income − Funds from Known Sources = Funds
from Unknown Sources

Answer 1

Page 1 Steve Slick Willy 45 years old decided to collect debts from the companies by collecting debts he buys a new 'Jaguar which he drives to parcole meetings. According to the given information in the given question, the table provided is a net worth analysis of Slick's girlfriend Net worth Analysis of Sleck's Gioffsiend Details Amount ($) Three cats costing 85,000 House 3, 60,000 Amount moving through her bank account | 45.000 mortgage 1, 10, 500 - 6,500 As per question - cars payments total $2000/month a mortgage payment & 2,600 $ 85,000 / 2000 x2600 credit card balance monthly payment home shopping network $600 /month 812 food payment $350x52 payment to Jamica coupse line Diamond sing as gift -7,200 -18,200 1 -3, 650 4,500

Page 2 Income from small testaurant) 16,500 Average expenses on monthly - 24000 $ 2000x12) Average of $1500+$2500 $1500 + $ 2500 la = $2000 Net worth anaylsis of Slick's 5,61,950 Girlfriend Conclusion. As per above calculation, we noticed that slick girlfried has only own income is $ 16500 yearoly from small restaurant Rest . of the amount completed sponsposed by steve. So steve is having amount of money to pay to the federal government. Presently Stive is paying only $400 a month or $4,800 yearly which is quite low as compared with his present yearly net worth, he could only have pas > $400 / month of 10% of his income.

Answer 2

Why is it that you base your mortgage payment on the car?