The Supreme Court of the United States has often called Chapter 7 bankruptcy the “Fresh Start”. This is an accurate description of debt relief given by Chapter 7. Debtors are given a rare opportunity to get rid of their debts without paying them. At the same time, they are able to keep all, if not most of their assets, and their income. Think about it. They will still have the house they live in, their retirement accounts, their cars & furniture. In most cases, they keep everything they own, and all of their income.
Let’s look at several recent actual client profiles:
A Chapter 7 bankruptcy will discharge $110,000 of back income taxes and $30,000 of credit card debt allowing her to be debt free. At the same time, she can keep her house with $150,000 of equity. It’s too bad she liquidated her 401K because she would have been able to keep the entire $180,000 in her retirement account despite her Chapter 7 bankruptcy. She’s off to a “Fresh Start” at the age of 66 having discharged all she owed to the IRS and FTB and credit cards while keeping her house, other assets and her income. She has the peace of mind of retiring without debt and keeping her current and future income for herself.
Even though the amount of $2,000 a month for a dependent is an unusually large amount, this is a perfectly legitimate deduction allowed by the means test. With this deduction, client was eligible for Chapter 7 relief subject to strict scrutiny by the Chapter 7 trustee and the U.S. Trustee. But as the Supreme Court has said many times, Chapter 7 relief is the “Fresh Start” that is given to the “honest” debtor. Since client was perfectly honest in her case and had all the documentary evidence to support her deduction, I filed the case for her last month.
Yesterday was the 341A meeting of creditors. To tell you the truth, I was surprised how smoothly everything went at the hearing. The U.S. trustee showed up and I thought he showed up to ask my client questions. But the UST showed up to question the debtor before my client, and did not have any questions for my client. Indeed, the “Fresh Start” is given to the “honest” debtor so he or she can become productive in life again.
“O Sovereign Lord! You made the heavens and earth by your strong hand and powerful arm. Nothing is too hard for you!” Jeremiah 32:17.
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 four thousand successful bankruptcy cases in California. He speaks Mandarin & Fujien and looks forward to discussing your case with you personally. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S Fremont Ave., Mailstop 58, Bldg A-1 Suite 1125, Alhambra, CA 91803.
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