CLIENT FILES CHAPTER 13 FOR CREDIT CARDS & ABANDON RENTALS; ANOTHER FILES CHAPTER 7 TO DISCHARGE $80K CREDIT CARDS USED FOR BUSINESS; WHITE HOUSE APPEALS AMNESTY RESTRAING ORDER TO COURT OF APPEALS

CLIENT NO. 1

Client no. 1 is in her fifties. She comes to see me regarding a lawsuit by a credit card collecting $7K. Aside from this, she owes another $11K, for a total of $18K total credit card debt. She has a story to tell which I will not disclose here. But, I believe God sent her to talk to me regarding her life experience. I was moved by what she told me she had gone through. It reminded me of the lamentations of “JOB” who suffered the loss of everything that was valuable to him as a person and a father. This is how deep and life changing her experience once. I have never met a person who went through what she went through. Her experience would make her question the love of God, but just like Job, her faith in God remains. I can truly say that her faith is very strong. Just like Job, our Lord gave and took from her. Yet, just like Job, she continues to bless the Name of the Lord!

As we discussed her financial situation further, it became apparent that credit cards were only the tip of the iceberg. Her income is good. But she had two rentals, which were negative $2K a month. That’s the 800 lbs. gorilla in her financial affairs. Even if her mortgage is reasonable at $1700, with a negative of $2K on the rentals, client is paying almost $4k a month for her real estate properties. $4K a month actually uses up all of her net take home pay. Naturally, there’s nothing left for credit card debt. She does not qualify for Chapter 7 because the equity of her residence is way beyond $175K so she needs a Chapter 13 to give her relief.

The Chapter 13 will help her by allowing her to abandon the two rentals in the reorganization plan. Since the rentals do not have 2nd trust deeds, abandoning the rentals to foreclosure, if the foreclosure is extrajudicial which accounts for 95% of foreclosures in California, will mean that there is no foreclosure deficiency. As a result, Chapter 13 reorganization plan will allow her to get rid of the two rentals without any further liability, while her $18K of credit card debt will be paid in 60 months without interest, just principal. She’s looking at a plan payment of about $350 for 60 months. The Chapter 13 will dissolve the lawsuit, and prevent any further lawsuits, as well as levies on bank accounts, and wage garnishments in the future. It will also allow her to get out of the $2K loss that she pays for every month from the two rentals. Chapter 13 will provide client with a reasonable payment that she can afford that takes care of all of her credit card debt. If she completes all 60 payments on a timely basis, the court gives her a discharge order. These creditors cannot come back and sue her for any difference they claim is unpaid because these debts will be discharged. At the same time, she saves $2K a month because she no longer has to absorb the negative rent. In short, Chapter 13 will give her peace of mind to replace the financial chaos that she has gone through since 2007. She will be able to face retirement without debilitating debt. This is good, right?

CLIENT NO. 2

Client no. 2 is also in his fifties. This is my fifties week it seems. He owns and operates a business that used to generate $800K of revenues yearly with a good profit for the last 10 years. However, last year, the business started losing money and has not recovered. Client says that the prospect of becoming profitable again is dim. In fact, he is stuck with $60K of inventory, which nobody wants. Client used his credit cards to finance the business, and he is personally liable with the business for these credit cards, which is now about $80K. Since the business is now at a standstill with no cash flow, there is no money to pay the minimum of $2,400 to keep them current. Besides, every dollar that he makes now from doing odd jobs goes to pay his mortgage of $1,800.

Client will file a Chapter 7 to discharge $80K of credit cards. The discharge will protect his residence from future liens arising from lawsuits to collect credit card debt. Fortunately, his entire equity of $100K in his residence is exempt under bankruptcy law so he keeps his house. He has two old cargo vans, which he is able to keep also. In effect, he keeps everything he owns but wipes out $80K of credit cards. He gets a fresh start in life without burdensome debt. His credit score will increase every year. Next year, his credit score may hit 600 depending on how he handles new debt. On the third year, his credit score will hit 650, which is good enough. On the 7th year, his score will be over 700, and on the 10th year, there is no record of bankruptcy on his credit report. He will get new credit cards again within 6 months of getting a discharge but I caution him to pay those in full if he uses them. Since his business, a corporation has not filed for bankruptcy he can continue doing that business if he should decide to do so.

WHITE HOUSE APPEALS AMNESTY RESTRAINING ORDER TO 5TH CIRCUIT COURT OF APPEALS

On immigration amnesty, the White House appealed the restraining order holding up implementation of the President’s executive order for amnesty, to the 5th Circuit Court of appeals on March 12. Response is due from plaintiffs in 10 days, which is March 22. Will the 5th Circuit dissolve the restraining order in California and other states that do not object to the executive order? 

“WE WAIT IN HOPE FOR THE LORD; HE IS OUR HELP AND OUR SHIELD.” PSALM 33:20.

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.