Client seeks Chapter 7 relief again for $48K in credit card debt

Client seeks Chapter 7  relief again for $48K  in credit card debt

WHO said that, first is chance, twice is coincidence and third is habit?

I have two new clients who are actually previous clients. The first is 55 and she filed jointly with her husband 12 years ago for Chapter 7 relief of credit card debt. To tell you the truth, I still remember mostly everything about the client and her husband one and a half decades ago. At that time, my main office was on Figueroa and 2nd street in Downtown LA, and it was just the next building from where the bankruptcy trustee hearings were being heard. I would just walk with clients from my office to the hearing.

That was so convenient. Creditor reps would pass by my office for coffee after the hearings and talk about reaffirmation, and possible objection to discharge of claims. The creditor would sometimes show me the pattern of credit card usage of the last month, and say look, the debtor’s income is only so much; how in the world can he pay his credit card debt, implying that there was some kind of fraud and absence of intent to pay for credit card debt inferred from insufficiency of income. Or, sometimes creditors would offer to keep the credit line open despite bankruptcy.

I remember this client clearly because her husband was a famous sports personality and actually held a world champion title in his sport. World champions are rare indeed, few and far in-between, and they stand out from the regular Joe or Mary. At that time, they had racked up about $60,000 of credit card debt. The minimum payment of $1,800 was putting a lot of strain on their finances. So, they opted for a fresh start without the $60,000 debt.

A fresh start is what they got on the financial side, but husband had other personal problems, and addiction to alcohol was one of them. When you start with beer for breakfast, beer for lunch and beer for every hour of the day and night, your liver just cannot process the alcohol quick enough. When push comes to shove, cirrhosis of the liver is the result after a decade and a half more of this kind of drinking. That’s when the whites of your eyes turn yellow, then you know you’ve met the end of your drinking days because you will soon die because your liver doesn’t work anymore.

The client tells me that her husband died two years ago from too much drinking. He just could not stop. He literally drank himself to death. What a sad way for a world champion to die. Once an epitome of good health to such an extent he became a world champion but he ends up dying the sad death of a drug addict. What a change of fortune. He had the background to be productive for the rest of his life just by teaching kids in his community how and what it takes to become a world champion like himself. This would be maximizing his God-given talents. But alas, the “spirit is willing but the flesh is weak” – This is what Jesus said to Peter as He agonized on that night thinking about what He had to do to fulfill the will of God the Father, to redeem mankind from the consequences of sin. He said of his anticipated torture and death on the cross, Jesus prayed to the Father as He perspired blood, “Father, if it is possible that I pass on this cup, but nevertheless, Thy will be done, not mine!”

The managed to get a divorce just a month before husband died, so technically she was not a widow. At any rate, client’s new credit card debt post fresh start 15 years ago, now reached $48,000. So since this is her second time to seek a fresh start without debt, it’s just a coincidence. It’s not yet a habit. But the client is such a positive outlook on life, and her second fresh start includes a new husband! She remarried last year. Our God, Adonai, and His one and only Son who died for our sins, blesses her indeed!

Client seeks Chapter 13 again for default on residence

My second old and new client filed a Chapter 13 case to cure arrears in his house 20 years ago. At that time, there was still the six-month rule concocted by the bankruptcy judges in the Central District of California to protect mortgage holders from debtors who file a second Chapter 13 case. If the debtor filed a second Chapter 13 case, he would have to bring to the first hearing of creditors, all of the mortgage payments due in the last six months. So, if the mortgage is $2,000 a month, the debtor would have to bring $12,000 in certified funds to be paid to the mortgagee. For most debtors who were even having a hard time paying one mortgage payment, the six-month rule, pretty much rooted out a lot of debtors from being able to get to second base. The client was one such debtor. He got hit hard with the six-month rule. But fortunately for him, the first mortgage on which he had arrears went bankrupt, and the bank that took over the loan did not surface for a very long time. I believe the new bank did not appear for three or four years. By that time, the debtor had set aside enough funds to get current on his mortgage and all went well for him until recently when he retired. He’s now behind four months on the mortgage. Now, Chapter 13 again is required to help him cure the default. He will be given five years to pay the default in 60 equal monthly installments, thus protecting his house from foreclosure.

Again, this is client’s second time, so it’s just a coincidence. It’s not yet a habit.


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Disclaimer: The foregoing is an expression of opinion and is not meant to be legal advice to any reader. There is no attorney-client relationship established by this article with the reader. If you want to discuss your situation, you have to set an appointment to consult with the attorney. The first general consultation is free.

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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California.  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 91803 or at 20274 Carrey Road, Walnut, CA 91789.

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