Once in a while, there will be a prospective client who will come to see me to argue against himself. I say client argues against himself because he has decided not to face the reality of his debt problems. 

First, client already has two judgments against him. One judgment is for $33K, and another is for $8K. I ask him if they have judgment liens on his house. He says that the $8K has lien on his house, but as far as he knows, the $33K doesn’t have a lien on his house yet because creditor lawyer has sent him a notice of judgment creditor examination at the end of this month. A judgment creditor examination is a hearing where client has to go to court and creditor attorney cross examines him on the whereabouts of his assets so that creditor can enforce the judgment against those assets to take those assets to satisfy the judgment. 

Second, client explains to me rather emotionally that the judgment for $33K is for a commercial lease that he did not pay years ago when he had a business. However, he says that he only owed $13K of unpaid rent, so he does not agree that he owes $33K. I said what’s the difference? The judgment is already against you for $33K. If you believe you only owe $13K, why did you not file an answer that says you only owe $13K?

Well, he says that he was never served by summons and complaint. I asked him why is that? He says that he was out of the country when they claim to have served him. He said he was out of the country for a week when he says he was served pointing to me the date on the summons. I said that’s not the service date on you; that is the filing date of the complaint. So he says they also claim that they sent the summons and complaint to a P.O. box address. So, you can see that he’s arguing his case to me despite the fact that he has a judgment against him for $33K. He believes he only owes $13K. 

In any event, I told him that he could have the judgment set aside if he was never served, and then he can file an answer that says he only owes $13K. However, I told him to attend the debtor examination because if he doesn’t attend that he will be in contempt of a court order and can get sent to jail for contempt. 

Another way is just to file bankruptcy, in his case a Chapter 13 because he owns a house with equity that is about $100K beyond his homestead exemption. If the Chapter 13 case is filed before the date for the debtor examination, then he does not have to appear for the examination anymore because the bankruptcy filing will stop the debtor exam from proceeding because of the automatic stay order of the bankruptcy court which stops all collection efforts by creditors.

So here comes the next argument. He is worried that the bankruptcy will affect his credit score. I said with two judgments against you, your credit score right now is probably 400 or below. But with Chapter 13 bankruptcy, your credit score will be perfect again on year 7. Client is still young, only late forties. He thinks he’s old. No, I said, you’re just a baby. When you become 55, with Chapter 13, you may have perfect credit again. 

He said he wants to negotiate with the creditor to lessen the $33K since he believes he only owes them $13K. I said even if you owe them $13K, plus interest for years unpaid at 10% p.a. plus attorney fees and penalties, you’re really looking at $33K and that $33K is increasing at 10% p.a. legal interest. If you don’t pay that, creditor can foreclose on your house eventually. Why assume this kind of risk, losing your house to this judgment, when you can handle this through Chapter 13, which protects your house from foreclosure by this creditor? Even the $8K creditor that already has the lien on your house can foreclose on your house.  Do you really want this to happen?

There are clients like this who are headstrong in the wrong way and insist on their own kind of justice that has no basis in reality. They’re living in a fantasy world. 

Bankruptcy law exists to protect you and your assets from debt and creditor enforcement to collect what you owe them. Use bankruptcy law against your creditors and either start fresh with no debt with Chapter 7, or reorganize and protect your house using Chapter 13. Don’t hide your head in the sand and pretend that everything is good; when the reality is that your financial situation is truly a mess.

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

“ONE SERAPHIM CRIED TO ANOTHER AND SAID: ‘HOLY, HOLY, HOLY IS THE LORD OF HOSTS; THE WHOLE EARTH IS FULL OF HIS GLORY!” ISAIAH 6:3

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.