SENIORS NEED RELIEF FROM BIG HELOC 2ND T.DEED & $40K CREDIT CARDS; SENIOR LOSES JOB NEED CHAPTER 7 DEBT RELIEF

Clients are 63 and 64. They are young seniors. Up to 65 you are a young senior in my book. You can get senior discounts at Golden Corral for a satisfying buffet. Last time I went there, half of the patrons looked like they were over 65. A lot of them looked like they were pushing 75. I know the manager there, Terry. I’ve known him for 30 years. He was the manager at Home Buffet before it closed. That guy is probably the best restaurant manager in LA because his idea of service comes from the heart. In addition, I get free dinners if you bring this article with you! Younger or older, bring the whole family with you to the Golden Corral at the City of Industry. You won’t regret it. Price is cheap and they have a great selection of all kinds of meat.

Let’s get back to our young seniors. They own a house that’s currently worth $500K. All their children have grown up and they are now empty nesters like a lot of us baby boomers. They owe a first mortgage with a balance of $165K. They also owe a HELOC 2nd mortgage with a balance of $200K. Yes, the 2nd is bigger than the first. They’ve been reading about getting rid of the 2nd mortgage since 5 years ago. Unfortunately, it’s now too late to get rid of the 2nd mortgage in a Chapter 13 because there is equity supporting the 2nd. Sorry can’t avoid the 2nd lien. Maybe 5 years ago, it was still possible, but now with house values reaching the sky, it’s not possible to strip the junior lien. I did a lien strip last month for a client who lived in Rialto. His house was appraised at $258K whereas the balance of his first was $264K. He had a 2nd of $77K. We were able to strip the 2nd mortgage of $77K in Riverside bankruptcy court, just barely. Citibank called me 3 days before the hearing date and informed me that they would stipulate to a judgment granting the motion. So that’s done but this client practically won the lottery on this issue. 

But for most cases now, there is some equity supporting the 2nd mortgage, so the 2nd mortgage cannot be stripped just like the case of my young senior clients. Husband had a major stroke two years ago but recovered almost completely. No slurred speech. Walks normal except for a slight limp. He can still drive but can’t work anymore. So household income has gone down so it’s now hard for them to pay the 2nd which is still on interest only, once it becomes interest and principal at the start of the New Year. A lot of people who got interest only mortgage are destabilized when the payment converts to interest and principal. In this case, for interest only, they only pay $550. But with interest and principal, they have to pay $1,600. When it rains, it pours just like Irma in Florida. Everything gets destroyed. 

Husband also owes $40K of credit cards. That’s another problem. Step one is try to refinance the 2nd with a fixed 30 year loan, maybe interest and principal will just be about $1K a month; still a lot less than $1,600. If no one will give them a 30 year fixed to refinance the 2nd, then take step two: Sell the house and get their net cash of $160K. At least, they will have some cash, which they can invest. If they invest $160K with Bernie Madoff, he can print them returns of 20% or $32K a year; too bad, Bernie’s already in jail. They can probably get a decent return of 6% or $9,600 a year. That’s not bad. $800 a month of income will certainly help pay for the senior housing they can move into. Senior housing, I understand is about $1K a month for rent and you get to play the whole day with all the other seniors living there. They have children who have invited them to live with them, but they don’t want to burden their children with caring for them. Husband jokingly says that if they can’t sell the house, he will just hang himself. I said that he doesn’t have to do that, just go sell the house first, and then let’s dissolve the $40K of credit cards after the sale of the house. He says he needs to go to the bathroom.

The second client is 68, married, and he has just lost his job. He says Trump eliminated his job. I thought he was a job creator? He says he can’t pay for the new car that he just bought and about $15K of credit cards. I said just return the car and the voluntary return deficiency of about $10K and the $15K of credit cards will be wiped out with Chapter 7. He is much relieved so he says he has to take a month vacation first abroad with his wife. I said sure go ahead, and let’s file your case when you get back to LA. He said just the minimum payments on the $15K of credit cards is about $500 a month. He said he’s paid it for the last 20 years, just the minimum. So, he has paid $120K to keep $15K of credit cards current for the last 20 years. Was that a smart thing to do? I don’t think so. I think when you are 68 you would rather have $120K of cash invested in a portfolio giving you $1K a month of extra income in addition to social security rather than owing the same $15K of credit cards that should have disappeared a long time ago when you were a lot younger.

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

“YOU WILL SEEK ME AND FIND ME, WHEN YOU SEARCH FOR ME WITH ALL YOUR HEART” – JEREMIAH 29:13

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.