CLIENT FILES CHAPTER 7 TO DISCHARGE $500K MOSTLY CREDIT CARDS;CLIENT FILES CHAPTER 7 TO DISCHARGE $10K CREDIT CARDS

CLIENT NO. 1

Looks like I signed up two clients in opposite ends of debt last week. Client no. 1 is 55 years old and divorced for 10 years. She lives by herself in a house that she owns. The house has no equity because she has 2 mortgages on the residence. The second trust deed is for $200K, which she used for her business enterprises, which have all failed in the last 8 years. Client still has a lot of drive and ambition. She still works as an independent sales contractor but doesn’t make much from it. Since she hasn’t had much income from work or business in the last 8 years, she has defaulted on the 2nd trust deed for a long time. Since the house has no equity, it doesn’t make sense for the 2nd to foreclose. If the 2nd forecloses, creditor would have the sell the house so the first can be paid off, or creditor would have to keep the first mortgage current by paying the monthly mortgage payments to prevent the first from foreclosing. It only makes sense that the 2nd will bide it’s time until the value of the property increases to such value that a foreclosure sale of the property will pay off both the first and all of the 2nd, so that the 2nd will recover it’s loan to client completely.

Client is a businessperson who was engaged in several businesses in the past. She had 3 companies, which were all profitable before. But with recent changes in the world economy, all her businesses eventually started losing money. To keep them afloat, client borrowed from all available resources, including credit cards. With credit cards alone, client owes $300K to $400K. The amount owed already reflects interest and penalties for the last 8 years, so the principal owed as of the last payment probably was about $200K. Several credit card companies have sued her in the last couple of years and there are judgment liens on her residence for about $100K. 

Client decides that it’s about time for her to get a fresh start with no debt. Her chapter 7 bankruptcy will discharge all of the $500K unsecured debt. She will also be able to cancel the $100K judgment liens on her residence in the bankruptcy via motions to avoid judgment liens. She will not be able to strip or avoid the 2nd t. deed of $200K, but most certainly, that mortgage will be discharged. This means that creditor cannot sue her to collect on the mortgage, but creditor still holds the house as collateral. So, creditor still has the remedy of foreclosure. However, because the property is so upside down at this point, there is no incentive for creditor to foreclose. 

CLIENT NO. 2

Client is young at 37. For me anyone below 60 is young. So if you’re 59, I consider you young. I started counting backwards 15 years ago. I mean, what’s the point of counting your real age. As long is one is healthy and can think clearly, one does still feel young. To tell you the truth, I still feel like I’m 25. But I digress. Client only owes $10K of credit card debt. She used to work full time, but now works part time. So, $300 a month to keep $10K of credit cards current feels like a heavy burden. I actually told her to hang in there and hold the fort. But given the fact that her credit will be perfect again when she becomes 47, with high credit scores starting at age 40, client is inclined to file for Chapter 7 for a fresh start with no debt.

All she needs to do is handle her new credit well and she will build up her credit score very fast. There are banks that issue credit cards that have just gone through bankruptcy. I suggested that she gets these cards when these are offered to her but that she should pay them in full after each use.

Each case is different. For one, she can carry a $500K debt loan for 8 years and receive $100K of judgment liens on her house and keep that burden in her mind for a long time. For another, a $10K credit card debt is a big burden when she loses her full time job. So whatever your debt burden is, come and make an appointment to see me for a free analysis of your financial situation. You won’t regret it. Once you decide, you will feel that a heavy burden has been lifted from your chest, and you will become productive again. I am telling you the truth.

“”HE IS NOT HERE; HE HAS RISEN!” REMEMBER HOW HE TOLD YOU, WHILE HE WAS STILL WITH YOU IN GALILEE: THE SON OF MAN MUST BE DELIVERED UNTO THE HANDS OF SINFUL MEN, BE CRUCIFIED AND ON THE THIRD DAY BE RAISED AGAIN.” LUKE 24:6-7.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years.  He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California.  He speaks Mandarin and Fujien and looks forward to discussing your case with you personally.  Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave, MAILSTOP 58, Building A-1 SUITE 1125, Alhambra, CA 91803 OR at 20274 Carrey Road, Walnut, CA 91789