DOWN AND OUT CLIENTS SEEK CHAPTER 7 FRESH START IN LIFE

We will discuss two recent cases involving clients who truly need a fresh start in life with no debts owed to anyone. The first case involves an individual who has been self employed with his own business for 10 years. The problem in this case is that the IRS levied his bank account last week and got all of his money including the operating capital for his business. The business doesn’t really make much. The gross receipts are good but the expenses are high so the profit margin is very small barely enough to pay all business and personal expenses of debtor. While he had money in the bank account, he is able to continue paying expenses, but with the IRS levy, he has no cash to pay business and personal bills. As a result, there was no money to pay business loans as well personal loans.

So, with very bleak prospects for the future of his business, client went out to seek employment. Fortunately, he did get one firm offer that pays $2,500 a month, and another prospect that is still considering his application that will pay him $4,000 a month. He owes $60,000 of credit card debt and owes the IRS $20,000 for income taxes for the period 2006 to 2010. What will happen if he does not file for Chapter 7 relief now? He will still owe the $60,000 of credit card debt, and the $20,000 of back taxes and so when he starts on his new job the IRS will certainly garnish his wages, and the credit cards will sue for collection unless he continues to pay the minimum due. Even with a gross salary of $4,000 monthly, debtor will have a very difficult time making ends meet if he has to satisfy the IRS and credit card debts. Just the minimum payment on credit cards alone is $1,800 which is a big chunk out of his take home pay. Coupled with an IRS garnishment of wages, let’s just say client’s back is literally against the wall. Unless he is able to work two jobs and live in his car, there is just no way he can pay his IRS and credit card debt.

What impressed me with debt was that he was optimistic and emphatically said that he needed to start his life over with a fresh start. A lot of people would get really depressed with client’s personal circumstances but not him. His outlook in life was positive and said he was a hard worker who works 14-hour days starting at 5 am. He thanks the Lord for giving him good health, continues to trust in Him and looks forward to start life again without worrying about the IRS and credit cards. So, I want to say KUDOS to this client because he reminded me of Job who lost everything, all his children and all his assets, when he used to be the wealthiest man in his country. When the devil told the Lord that Job only worshipped Him because the Lord had blessed him with so much wealth and a good family, the Lord allowed the devil to do anything he wanted to Job except take his life. At the end of the trial when Job lost everything, he shouted to the heavens when his friends were telling him to curse God because of what happened, Job said “the LORD GIVES AND THE LORD TAKES AWAY, BLESSED BY THE NAME OF THE LORD!” Subsequently, God gave Job double of what the devil had taken away.

The other client was also in business. His business relies on payment from Medicare for services provided. The problem is Medicare can sometimes ask for a refund or reimbursement if they later find that you are overpaid because in their analysis they should have paid less than what they did. In client’s case, Medicare asked for a whopping refund of close to a million. Is the refund owed to Medicare dischargeable in bankruptcy? It sure is. Client’s equity in his house was about $120,000. That’s not a problem. He can keep his house and discharge the $1.0M owed to Medicare, and start fresh start in life without the $1.0 M burden.

 “I can do all things through Christ who strengthens me;” Philippians 4:13.

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, Bldg. A-1 Suite 1125, Alhambra, CA 91803.