BUSINESS WITH $2.1M JUDGMENT AGAINST IT SEEKS CHP 11 RELIEF; SENIOR WITH $24K DEBT SEEKS CHP 7 RELIEF; SENIOR PROTECTS HOUSE WITH CHP 13

CHAPTER 11

Client presents himself as an importer & nationwide distributor of electronic items with gross annual sales $5.0M. He has a warehouse in Los Angeles with 15 employees. His business is actually doing well. But due to a business dispute with a major supplier, there is a recent judgment of $2.1M against his business for breach of contract. But for this judgment, his business would not have any major problem. Orders keep rolling in and his warehouse crew is busy shipping out the orders. His suppliers are getting paid, although with a little delay. The suppliers don’t mind that he is a little late. His business has been operating for 7 years. It still turns a respectable profit and sales are increasing. He just got a nationwide retailer as a customer last month.

He has bank loan of $2.0M for operating capital secured by inventory & receivables. He uses also direct suppliers’ credit for $1.0M. He is working out a very big order for the nationwide retailer. The $2.1M judgment against the business threw a big monkey wrench into his business operations. Judgment creditor is now threatening to levy the business accounts, inventory and receivables to satisfy the judgment.

Chapter 11 will allow client to prevent the levy on the business accounts, inventory and receivables. Chapter 11 will further allow the business to continue operating without fear of further lawsuits from anyone. It will allow payments to suppliers so that the business can continue operating. It will give client enough time to devise a feasible plan to continue business. This plan may completely disregard the judgment of $2.1M as if it never existed if the court confirms the plan. Clients’ business will emerge from Chapter 11 as a leaner and more profitable company thus assuring its continued viability.

CHAPTER 7

Client is 70 and now lives by himself. All his children live out of state. His wife is much younger so she still works. But she works in the East Coast. She has her own living expenses there and her own debts. She doesn’t have any financial problems because her income is good and she doesn’t really owe too much debt. She’s pretty much living her own life there, and he’s living his own life here in Los Angeles.

He has $24K of credit card debt. He needs to pay a minimum of  $750 monthly to keep the cards current. He used the cards to cover the medical expenses of relatives abroad who had no insurance. His younger brother needed a heart by-pass, and the cost abroad was $20K, which is not expensive by US standards. His problem now is he only has social security of $2K, and a pension of $1K, monthly. His rent is $900 and he still pays for a new car at $500 monthly. He said he couldn’t pay for the car and the cards anymore. At his age, he just doesn’t want the stress of paying for credit cards and a car anymore.

Chapter 7 will discharge the $24K credit cards and allow him to return the car and have no further liability on it.

CHAPTER 13

Client is 64. Her house in Irvine is now worth $1.0M. She still owes $500K on the house. She applied for a loan modification of her mortgage through the government sponsored entities. I’m not sure why, but she was told to stop paying her mortgage until the LM application got approved. The problem is that the first loan modification application she filed was denied after 4 months, and the second loan modification application she filed was denied after 3 months. So, now she is 8 months behind on the mortgage. Last week, she sent two months of mortgage payments to the lender. The lender returned her check and told her that foreclosure proceedings would start in a week. She desperately wants to save her house because she says aside from the large equity, all her children grew up in that house, so she and her husband want to do everything possible to save it from foreclosure.

Chapter 13 will stop foreclosure proceedings as soon as the case is filed. Client will then be give 5 years to pay off the 8 months default over 60 equal monthly payments. She also owes $10K to the IRS. The plan will allow her to pay this over the same 60 months without interest or penalty. She wants to keep her 2012 Lexus and lessen the monthly payments. This can also be done because the balance of the car loan can be spread over 60 months thus reducing the car payment.

“IF YOU WALK IN THE LIGHT, AS HE IS IN THE LIGHT, WE HAVE FELLOWSHIP WITH ONE ANOTHER, AND THE BLOOD OF JESUS, HIS SON, PURIFIES US FROM ALL SIN.” JOHN 1:7

Lawrence B. Yang is a graduate of Georgetown University with a Master’s Degree in Law and specializes in Bankruptcy, Business, Real Estate and Civil Litigation.  He speaks English, Mandarin and Fujian and has successfully represented thousands of clients in California, including companies overseas.  Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave., MAILSTOP 58 BUILDING A-1 SUITE 1125, Alhambra, CA OR at 20274 Carrey Road, Walnut, CA 91789.