Family of 3: $40K credit cards owed

Client no. 1 is so young. She is in her late thirties, less than 40. I remember when I was that young, a young lawyer with a decade and a half of experience. Seems only yesterday. Yeah, time flies and waits for no man or woman. That is certainly true. Client is lucky to be still working in this pandemic. She still has two jobs. She works hard because she has to take care of her young family. She has a 12 year old and she’s married. But husband though willing to work has not yet found a job as he is a new immigrant to this country. It’s pretty hard to get a job nowadays as you well know. Lots of citizens have lost their jobs. Indeed, millions have lost their jobs as the economy has tanked due to the raging pandemic that doesn’t exist. I thought it was basic common sense that wearing a mask helps prevent the spread of the virus. I didn’t expect that wearing a mask would be a matter of constitutional right. Well just 5 more days and we get the verdict of the American people. I voted by mail like millions of others who wanted to have their vote count. As I hear it from the pundits, this is an historic election like no other before. It’s either we descend further into chaos and become a banana republic, or we get back our humanity as a people. You have the right to vote for our future. Just do it, whoever you want to lead our great nation to kingdom come. 

Young client owes $40K of credit cards. Her gross income is $50K a year. She’s the sole bread winner of the family at this time. Her rent is $1K a month. So, her monthly gross is about $4K. That means her take home pay is about $3,500. Deduct the rent of $1K and she has $2,500 left. To make the minimum payments on $40K of credit cards, she needs $1,200 a month. For a family of 3, food and groceries can actually reach $1K a month pretty easily. I mean, that’s reality, unless you scrimp and save with coupons and always on the look out for promotions and freebies. So without further ado, you can certainly see at this point that the $1,200 for minimum credit card payments is a heavy burden for this family. 

She quickly decides that she needs the $1,200 that she can save from wiping out her $40K of credit cards for her family’s use and financial security. If she doesn’t have to pay the $1,200 to MasterCard and visa, she can save at least $12K a year. Every family needs to have some savings set aside for emergencies. She’ll have $24K saved up in two years without the $40K of credit cards to worry about. She doesn’t own a house. There’s no presumption of abuse under the means test. Client opts for Chapter 7 for a fresh start without the accumulated debt of $40K. Smart and correct decision. 

Family of 4: $45K credit cards owed

Client(s) no. 2 is husband and wife. Together they owe $45K. They tried doing “consolidation” a year ago, paying $700 a month. Under the consolidation plan, they will pay $700 a month for 60 months. They are a family of 4 with two teenagers still living with them. Their gross income is $6K a month. Both of them are still working in this pandemic. They told me that they are just tired of paying the $700 a month. They own a house but with two mortgages, the equity in their house is less than $100K. They are still young also, just late forties. Not yet fifty or almost fifty. Believe me, they are still young but feeling old because of the burden of paying $700 a month for another 4 years. Fortunately for them, they can wipe out the $45K with Chapter 7. A fresh start without accumulated debt. It takes them only a minute to decide to go for Chapter 7. I proceed further with analyzing their eligibility for Chapter 7, specially now with house prices on the ascent. The market value appears to be correct. They have less than $100K of equity. They are good for Chapter 7 and so they opt for a fresh start in life with no debt. Good decision. This is the correct decision for their future financial security. 

Single person: $50K credit cards owed

Client no. 3 is also young, mid-thirties. He is single but racked up about $50K of credit cards in the last 5 years. He was making about $100K a year before the pandemic hit. Like so many others, he lost his job when his employer closed shop because of the virus. Sales dropped to almost nothing. His boss had to let him go. He doesn’t own a house and had to move back with his parents because he had no money to pay rent for his apartment. His lucky he still has good parents around. He decides also rather quickly that he wants to get a fresh start in life by wiping out the $50K of credit cards with a Chapter 7 discharge; again, another good and timely decision. 

All these clients did the same thing that Walt Disney decided to do twice before the Disney Empire became successful. Yes, Walt Disney filed for Chapter 7 twice. Milton Hershey also filed for Chapter 7 before his chocolate empire became the biggest in the world. If you have accumulated debt that has become a heavy burden, seriously think about a fresh start with no debt. It’s the right choice. 

DISCLAIMER: NONE OF THE FOREGOING IS CONSIDERED LEGAL ADVICE. EACH CASE IS DIFFERENT.

“YOU ARE MY SHEPHERD. I WANT FOR NOTHING… THOUGH I WALK THROUGH THE VALLEY OF THE SHADOW OF DEATH, I WILL FEAR NO EVIL: FOR THOU ARE WITH ME… YOU BRING US TO LIE DOWN ON GREEN PASTURES… YOU PREPARE A TABLE FOR US IN FRONT OF OUR ENEMIES & YOU ANNOINT US WITH OIL…“ Psalm 23 written by King David 1000 BC.

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 20274 Carrey Road, Walnut, CA 91789 or1000 S. Fremont Ave., Mailstop 58, Building A-10 South Suite 10042, Alhambra, CA 91803.