SENIOR PASSES AWAY RIGHT AFTER CHP 13 PLAN CONFIRMATION;

BUSINESSOWNER WITH SEVERAL RESTAURANTS NEEDS CHP 7 RELIEF

Senior was currently my oldest client at 90. Everything came crashing down on him during his golden years unfortunately. He had a business, which looks like it never made money but he kept on doing the business just because it gave him something to do everyday. So, he had $34K credit cards, and $16K repo deficiency for total unsecured debt of $50K. That’s a significant amount of debt when you’re 90. He was receiving about $2K a month with social security a pension but had already sold his house with zero net proceeds 2 years ago. He had 3 adult children who are gainfully employed but he just wanted to live by himself, and I guess his 3 children pretty much left him alone. He was married twice and divorced twice and was already single.

His ex-second wife offered to let him live with her in her house. She still loves him.  For unknown reasons, ex-wife no. 2 puts him on title to her house! Oops. Her house already has a very large equity, more than $500K. She has her own adult children with her first husband. She has no financial problems until he moves in with her. I won’t go into details but she ended up losing her $300K of 401K. The two of them believed a scammer that promised a $10M pot of gold at the end of the rainbow, if only they forked over $300K. Wow, what a deal of deals. For $300K, you get $10M! Let’s not get into that right now. Suffice it to say that if it’s too good to be true, then it’s not true. When someone gives you this kind of proposal where you have to give money upfront to get a big windfall, just walk away and just don’t think about it again. It’s a scam. For example, for the senior ladies, if you suddenly meet a guy overseas who wants to marry you and he says that he’s some white dude who is the second cousin of the Queen of England, and he sends you a picture of a white dude who looks like Tom Cruise in full military uniform of the British Royal Air Force, better hold on tight to your money in the bank! The fool and her money will soon be parted. If you actually use up your credit cards to send him $50K, come see me for a Chapter 7 or Chapter 13, ok? You are never going to see your prince charming, and you are never going to see your $50K again, not in this lifetime.

Putting senior client on title to her house was a big mistake because instead of being able to file for Chapter 7 relief, he can only qualify for Chapter 13, to handle the $50K of debt. We could have done his Chapter 7 first and wipe out the $50K, and then if she still wanted to, then she can put his name on title six months after the Chapter 7 discharge date. But she put him on title as soon as he moved in with her. That fact changes the whole ball game in terms of getting the appropriate bankruptcy relief. When he came to see me the first time, I knew the $50K really irritated him to no end, even complaining why he would owe $16K of repo deficiency when the car has been returned to creditor. Sorry, that’s the way contract law works. Can’t blame him for being stressed out. Who wants to have to pay $50K of debt at the age of 90? Nobody I know wants this kind of financial stress at any age; what more when you’re already 90 and you don’t know how much longer you have on this earth.

Client then gets sick with liver cancer and given only a year to live. The court confirms his Chapter 13 case last week. Right after his case is confirmed, client passes away. Rest in peace and I am sure he is happy now in heaven with God the Father, God the Son, Jesus Christ, and God the Holy Spirit. So what happens to his Chapter 13 case, and more interestingly, what happens to his ex-wife’s house that has his name on it? And what happens to all of the $50K unsecured debt that he was going to pay through Chapter 13. We will discuss this at a later date. 

It’s really better to get rid of your debts sooner than later. Don’t wait too long. If you can qualify now for Chapter 7, just do it now. It’s harder all around if you wait until your 80. The spirit is willing but the body is literally to weak at 80. I have another senior client who was only 74 but on dialysis. He also passed away late last year just when the virus began to rear its ugly head. In his case, his joint debtor widow continued the plan payments. She moved in with her son and just rented out their house. It had a default of about $30K. That was the reason for the Chapter 13, to save the house from foreclosure. It was the right move, because the equity is now about $200K and she now gets rental income from it, which is net positive after mortgage payment.  For her, things worked out. Her son asked her to move in with him and his wife and family, and she was able to keep her house from foreclosure and benefit significantly from the increase in equity. But of course, although there was that risk of dying, her husband was on the waiting list for a kidney transplant. Husband had a major heart attack at night before they went to sleep. It was too late when the paramedics arrived, he was gone.

My classmate is still in a coma two months after being infected with the virus. Still on ventilator and has suffered multiple mini stokes. We are praying for a miracle to get him back fully recovered and conscious again. “Ask and it will be given.” “Knock and the door will open.” If it is God’s will, he will bless my friend with a miracle of full recovery. His wife and family still need him.

Next client is only 50. Believe me, that is young. He owns 3 restaurants. He sold one recently, but one of his former employees has filed a lawsuit for unpaid overtime of several years. He wants to close the 2nd restaurant that is no longer profitable because of lockdown. Problem is he personally is on the commercial lease at $7K a month for 5 more years. So he’s on the hook for $500K of unpaid rent. His third restaurant is still doing ok despite the lockdown. He wants to keep that restaurant. So, this is not unusual nowadays with the pandemic still untamed here in our beautiful country. This client needs Chapter 7 relief for a fresh start with no debt but with the ability to continue operating the third restaurant. 

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

“DO UNTO OTHERS AS YOU WOULD HAVE THEM DO UNTO YOU.” MATHEW 7:12

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.