Client is 58. He is not divorced but separated for 20 years. His income is good. He nets about $7K to $8K a month. He lives by himself and does not even own a car. He goes carpooling with a relative to go to work. His rent is $800 a month. So, he doesn’t really have too much monthly expenses of necessities for himself, except his food expense is about $1K a month with 3 meals a day; spends at least $30 a day for breakfast, lunch and dinner eating out. His problem is $84K of credit cards. He needs $2,800 a month for minimum credit card payments.

He appears to be able to afford making that payment because his disposable income, based on net income of $7K to $8K and actual monthly necessities, excluding credit card debt payment of $2,800 is about $3,000. In other words, every month, he has $3,000 available to pay $2,800 of credit card debt, which he has been paying for 15 years. He therefore has paid $504,000 in the last 15 years for minimum monthly credit card payments but still owes the same $84K of credit cards!  Well, half a million dollars is a fortune by most standards, unless you’re a billionaire who can afford to pay half a million dollars for 3 or 4 Ferraris without flinching. I’m sure that many people would rather have half a million dollars sitting in their retirement account, instead of $84K of credit cards! But $84K of credit cards is what client still has even after paying $504,000 to master card and visa in the last 15 years. If he had wiped out these credit cards in 2001, client probably would have about $1M of equities in his portfolio by now.

But instead of being a millionaire at 58, he has a lot of problems. He lives by himself, has chronic back pain and has received a lawsuit from one of the credit card companies. Now, where is his $3K monthly disposable income going into? Because I can see clearly that based on his current income and expense, he is able to float out $3K of disposable income every month. So I ask him if he has relatives who don’t live with him that he sends money to. His face lighted up as he informs me that he sends about $1K to his son abroad, and $1K each to his brother and sister who also live abroad. His son has just started college abroad and client pays for all his college tuition and living expenses abroad. He sends $2K abroad, which is split 50/50 between his brother and sister who have their own families abroad. Apparently, both his brother and sister do not make enough to make ends meet so client takes care of both of them. His remits to his son, brother and sister more than $3K a month. This eats up all of his current monthly disposable income. It’s either he pays $2,800 a month to credit cards, or sends $3K a month to his son, brother and sister who need the money to survive. It’s not a hard choice to make.

It appears that client was making a lot more than $7K to $8K a month before when he was younger. When he was younger he was making a net of $120K a year, or $10K a month. But his back has been giving him problems starting last year when he could not work at all because of chronic back pain. In his line of work, he has to do a lot of physical work, which has taken a toll on his back. He was on disability for the last 12 months until August he has been off disability. But when I saw him today, he was still contorting and grimacing due to back pain.

I’ve had back pain too and believe me, as you get older, it does not take too much physical activity to trigger back pain. I used to be able to do my gardening for 3 or 4 hours straight without any back problem. But nowadays, the most I can garden is one hour straight. If I do more than one hour of gardening, my back begins to act up and the pain from the pelvis starts to rear its ugly head. So, I have no doubt that since client has gone back to physical work, I don’t really know how long he can continue working with that kind of back pain. 

Faced with the foregoing circumstances, what client needs is bankruptcy relief to get rid of $84K of credit cards. But will client qualify for Chapter 7 relief where all of the $84K will just be wiped out without a single payment from client, or is his case really a Chapter 13? Well, this could be a nail biter just like the 2016 presidential elections. I was for Hillary, who, according to all the polls and pundits in the last 12 months was a sure winner, but in the end, she lost. Well, it must be God’s will for Trump to be our president. God’s ways are truly mysterious and unfathomable by us mere mortals. I’m really concerned for all the 11M immigrants who appear now have no path to be legalized under Trump. Let’s wait and see what happens. Let’s pray that our God, the one and only true God, the God of Moses and Israel, my God as well, will speak to Trump and guide him on the immigration matter. I am praying for a miracle on this matter for God’s greater glory.

If we file this as a Chapter 7, there could be objections from the US trustee on the $2K that he sends to his brother and sister since he is not really required by law to make these payments. In other words, Chapter 13 would be a safer bet. Maybe the court will accept a $400 a month plan payment for 60 months. This means he pays $24K out of the $84K credit cards, and the court discharges $64K. That’s a 30% payment. It’s not too bad. But let’s see, I still have to crunch out the means test to see what is possible and not. This remains to be seen but certainly he needs bankruptcy relief and will go for it. He doesn’t want a 25% garnishment of his wages from the lawsuit he just received. Can’t blame him, nobody wants to lose 25% of one’s gross wages to a garnishment.

“THIS GOD IS OUR GOD FOR EVER AND EVER; HE WILL BE OUR GUIDE EVEN TO THE END.” PSALM 48:14

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.