Client is 68 and married. He just received a notice of bank levy on his accounts for a judgment against his wife. He asks if they can levy his bank accounts since the judgment is only against his wife. Yes, they can because there is a legal presumption in California that the money in the account is community property. A judgment against the wife can be enforced against property in the name of the spouse because the property is presumed to be community property. Is there any way he can prevent the levy without filing a bankruptcy? Well, he can file a notice of exemption if the money in his account comes from social security or is a retirement account like an IRA. Money from social security in the bank is pretty much exempt and money in an ERISA qualified retirement account is exempt up to $1.0M. What his means is if client has $200K in an IRA held in the bank, which received the notice of levy, client can exempt the entire $200K from levy as long as he timely files a notice of exemption and claim the correct exemption under applicable California law.  Well, it turns out that client has only $50 in his bank account. So I said, its not a big deal, you lose the $50 to the levy and just close the account. 

The problem is he also owns a late model car that he fully paid off last year. It’s a M-Benz E 350 2010 model that’s currently worth about $15K. Certainly, the next stop of creditor is to lien this car. Then, he would have to try to exempt it again using the applicable exemption. Another step creditor can take to enforce the judgment is to garnish his salary since he still works as an accountant. He makes a gross of $4K a month. A garnishment order will take 25% or $1K of his gross income until the judgment of $12K is fully paid off with 10% annual interest. Client doesn’t like any of these possibilities. He doesn’t want to lose his car or have $1K taken off his salary every month. He won’t be able to pay his $1500 rent if his salary is garnished. 

I asked him if he owed any debts. He said he owed $60K of credit card debt but that they were all still current. I asked him if he was thinking of filing a Chapter 7 petition to wipe out the $60K of credit card debt and the bank levy. He said he was seriously considering it because his minimum payments on the $60K credit cards was almost $2K a month. He has been paying the $2K for the last ten years. So, he’s paid $240K in the last ten years in minimum payments to keep the $60K current in the last decade. But after having paid $240K, he still owes the same $60K! That’s not a good deal for client but a great deal for the credit card companies. That’s why he should have done his Chapter 7 ten years ago and bought instead $240K of visa stock. Check out the price of visa stock in 2007. It was around $20. Now it’s almost $100.  So if client had theoretically invested the $240K he saved from discharging his $60K cards in 2007 and used all of the savings to invest in just visa stock, how much would client have today? Well, client would be wealthy today because his visa stock would now be worth $1.0M! Instead of being a millionaire today, client still owes the $60K credit cards and facing a bank levy, wage garnishment and a lien on his car. 

I would say that its about time that he should get rid of the ball and chain that is keeping him poor and unproductive since he’s now 68. Client sees the light clear as day now and chooses to file Chapter 7. It’s ten years late but better late than never. When he’s 78, would he rather still owe the same $60K and throw away another $240K of minimum payments in the next ten years? I don’t think so. If he buys the right stock with the savings of $24K every 12 months, he will make himself “great again!”

Client no. 2 is 50 and married. His wife looks a lot younger probably 30. He is a businessman. You know how it is with business people. Sometimes they get into a situation where they can get sued for breach of contract or something similar to that. Client did get sued for $400K and he thinks he can’t win the lawsuit. I don’t know why he thinks he can’t win but apparently he wants a fallback position using bankruptcy to get out of the judgment that he fears so much. I turns out that he has two pieces of real estate with over $1.0M of equity. Well, that’s certainly a problem. I actually told him just to sell those properties now and convert the equity to cash now. At least cash can be easily sent abroad out of the jurisdiction of the United States. That’s a pretty common asset protection move. This is better than transferring title to the properties to someone else under his control because this asset protection move can easily be penetrated. It’s totally not bullet proof. I wasn’t sure exactly what he wanted from me. He said he wanted some kind of assurance from me that bankruptcy would protect his two houses. I said I couldn’t do that because there are too many if and buts about what he wants me to do. Even the judgment, if he loses, can have a finding of fraud which would make the judgment itself not dischargeable. Beside with that much equity, his bankruptcy choices are really limited. He can’t do a Chapter 7. If he did he would certainly lose both properties.

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

“WHOEVER GOES TO THE LORD FOR SAFETY, WHOEVER REMAINS UNDER THE PROTECTION OF THE ALMIGHTY, CAN SAY TO HIM, ‘YOU ARE MY DEFNDER AND PROTECTOR. YOU ARE MY GOD;IN YOU I TRUST.’HE WILL KEEP YOU SAFE FROM ALL HIDDEN DANGERS AND FROM ALL DEADLY DESEASES…” PSALM 91 – Authored by Moses!

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.