First clients are business partners who happen to be married to each other. They run a business that has been very profitable before Trump instigated his trade wars. From that business, they were able to generate good profits for several years that allowed them to buy a nice house in a very good neighborhood worth $1.0M. Since they bought their residence, the fair market value of the house has appreciated a lot such that today they have at least $300K of equity in the house.

Their gross receipts before the trade wars started were $4.0M a year. That’s a pretty good volume for any business venture. Profit margins would allow them to save at least $200K or $100K a year. That’s a decent profit margin, even though the margin is small, because the volume is good. So, from the profits, they were able to realize the American dream of owning a nice house. 

Here comes Trump with his trade wars, which directly negatively impact clients’ business. At this time, business for clients is bad, and with Trump flip flops on his trade wars, now you think it’s going to be resolved then the next day, you think it’s just going to keep on escalating until the whole world economy grinds to a halt. Nobody really knows what’s going to happen tomorrow. 

Under the best scenario, Trump may be delaying resolution of his trade wars right after the Feds reduce interest rates. With those two problems resolved, the stock market would then explode upwards. He needs to have a red-hot stock market in tandem with a strong economy, to get him re-elected in 2020. I am really hoping that this is really what will happen, lower interest rates and a stock market boom, will make all of us happier and richer.

Clients’ financial situation is they owe $150K of business credit line, $300K of credit cards, and about $100K of other unsecured debt. All of the $300K of credit cards was used for the business. So, they owe about $500K of unsecured debt. Now the problem is that they signed personal guaranties to secure the $100K. There is no problem with the $150K credit line because that’s a company loan, which will be resolved by the bankruptcy filing of the company itself. However, the $300K of credit cards is personal debt even though they were used for business, and the $100K other unsecured debt is also personal liability. 

Thus personal liabilities total is $400K. This situation is not that bad. The company can get rid of the $150K by Chapter 7 without affecting the clients as individuals. But the $400K is something else. They cannot do personal Chapter 7 to wipe out the $400K because they have non-exempt equity in the house of $200K. They can do a Chapter 13 to pay $200K out of the $400K over 5 years interest free and knock off the other $200K. The problem is they will need to pay about $3,500 in the Chapter 13 plan every month for 60 months. That’s not easily done when your business is going south. And even if they both start working, paying $3,500 into a Chapter 13 plan will be tough. 

So what clients need is what I call a “guerilla” plan to protect their house. This is what it really boils down to. They want to keep their house with its $300K equity intact while keeping the $400K creditors at bay and preventing these creditors from attaching their residence. 

What’s the “guerilla” financial plan all about? Wouldn’t you like to know wouldn’t you? You can’t drop a nuclear bomb on the creditors with a Chapter 7 total wipe out because clients will lose their house in the process. You’ll have to fight a war like the Vietnam War where they build tunnels to avoid carpet-bombing and fight in the jungle. That’s the “guerilla” war I refer to in dealing with the $400K. 

Second client is going to be my oldest client at 94. Before him, my oldest client was a Chapter 7 at age 90. This senior is still strong physically and would you believe, still drove he to my office. That’s great. Unfortunately, he fell for the “you just inherited $20M from your long lost uncle who just died.” 

He received a letter then a phone call from a European (so called) executor of his long lost uncle. Apparently, the uncle had left an estate of $20M with no claimants. So it was the executor’s responsibility to find his next of kin. Executor said that client appears to be a distant relative since they have the same middle family name. Client was invited to file an application, which was approved! Executor called client from Europe and said that he had determined that client was the rightful heir to $20M. 

To liquidate the estate (turn it into cash of $20M); he needed $150K from client. Client borrowed $150K from his retirement account and quickly wired the money over to the designated bank account. Executor then said he was going to bring the cashier’s check of $20M to Los Angeles. Upon arriving at LAX, executor calls client and sends him a copy of the cashier’s check made payable to client, but says that the IRS has frozen the check because the IRS needs advance tax payment of $350K. Believe it or not, client still borrows $350K from his retirement account and sends that over to the designated account.

Executor then disappears. Client reports his loss to the FBI. FBI investigates the scam and tells client they can get their money back if the money is still in the account. Of course, the account is closed. So that’s the story and it’s true not fiction. Once again, truth is stranger than fiction. 

Client now needs Chapter 13 to handle his credit card debt. I tell him it’s going to be a 5-year repayment plan, which he says is too long. He says all his friends are dying like very quickly one by one. A friend who was only 59 just died when he was eating lunch. So anyway, we can make it a 5-year plan and he can pay more than the plan payment so he can cut it shorter. He just doesn’t want to have liens on his house, which is now worth $1.0M. On the plus side, he is completely healthy.

If someone calls you saying you just won the lottery or inherited $100M, call me first ok? I may save you a ton of money.

If you need debt relief, set an appointment to see me. I will analyze your case personally.

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

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.