HOW old are you now? When you were 10, you wanted to become a teenager. When you were a teenager, you wanted to be 21. Thereafter, it’s a fast train towards middle age. At middle age, they say that you’re at your “prime”. Shortly after that, you become a senior citizen starting at 62 and you start considering your mortality. You look back and say, “Hey, what have I done, I haven’t saved enough for retirement!” In your late sixties, you’re trying hard to not look “old.” In your seventies, you start losing muscle mass and you “shrivel up” pretty much like a grape that has turned into a raisin. In your eighties, you’re surprised that you’re still alive when you wake up in the morning. But thanks to Jesus, who died for our sins, we can look forward to going to heaven after we die! He has given us the gift of eternal life. I hope Robin Williams, the comic genius of Mork & Mindy, Mrs. DoubtFire & BirdCage, who killed himself yesterday at 63, has found peace and happiness with Jesus in heaven for eternity.
Let’s look at two clients who are in different age groups:
• Client is 45 years old and makes a gross of $100,000 a year as a registered nurse. She has student loans of $60,000, which she pays $700 monthly. She is a single mom with a daughter who is a sophomore in high school, and a son who is in middle school. They both attend private school for which she pays $1,000 monthly. She owns a house with a mortgage payment of $3,100, and a 2nd mortgage payment of $1,000. Her house is worth $700,000 and has enough equity to cover both mortgages. Her credit card debt is $80,000. Her former husband agreed to pay for half of the credit cards, but never did so. So, she pays $2,300 a month to keep $80,000 of credit card debt current. She pays a car loan of $600 for a 2008 Lexus SUV 3.3.
Despite her good income of $100,000 a year, client is in bad shape financially. Her net take home pay is $7,000 monthly but her payments for the aforementioned student loans, private school, two mortgages, credit cards and car payments is already $8,400. So, even at this point, she is short $1,400 without considering food, gas and other necessities.
Client will do a Chapter 7 to discharge $80,000 of credit card debt, thus saving $2,300 a month. She will keep the Lexus the payments of which will end this year, thus saving another $600 a month. She can still save another $1,000 monthly if she decides to transfer her two children to public school. But that’s her decision to make. With bankruptcy she will keep her house, her car and her retirement account and everything else that she owns but she will discharge all of her unsecured debt, other than her student loans, thus giving her a fresh start in life, and giving her the ability to save for her children’s college expenses and her retirement in the future. Assuming client is disciplined enough to save $1,500 a month from not having to pay $2,300 a month on her credit card debt which will be totally wiped out by her bankruptcy, she will save $360,000 in 20 years! With cautious and wise portfolio investing, client will have close to $1.0 M in her hands in less than 20 years based on annual compound growth even at 6 percent.
With a bankruptcy fresh start with no debt to drag her down, this client will become a very productive individual again.
• Client is 59 years old. His wife is 55 years old. They have no children. He makes $2,500 a month. She used to make $1,500 a month as a caregiver but lost her job last month. Together, they owe $40,000 of credit card debt. They still pay $1,200 a month to keep the cards current. They have had these cards for the last 15 years and each month they pay at least $1,000. In the last 15 years they have paid MasterCard and Visa over $180,000 of interest, but today they still owe $40,000! With wife’s recent unemployment, they can’t pay the $1,000 any more. So, they want a Chapter 7 bankruptcy to get rid of the cards. I told them they should have discharged these debts 15 years ago; today they would have $180,000 in their pocket. Instead of paying creditors for the last 15 years, they should have paid themselves in savings of $1,000 a month.
“As for God, His way is perfect; the word of the Lord is proven; He is a shield to all who trust Him. – Psalm 18:30.
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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 Bldg A-1 Suite 1125 Alhambra, CA 91803.