FOR those with children in high school, the next big expense item they can look forward to, or shall we say, worry about are the college expenses that are just around the corner. Some people started saving for this expense early on but with college tuition even at the UC system increasing every year, only wealthy foreigners can afford to send their children to our California public universities now. In fact, UC’s are actively courting wealthy foreign families to apply at Cal and UCLA charging them very high out of state tuition, thus easing out many of our own local qualified students who are finding it very difficult to get accepted in our top tier public universities even though we have paid for those spots with our yearly tax payments. The truth is that our public university slots are being sold the highest bidder. This is not surprising, because the Feds themselves are selling green cards to the highest bidder in the EB-5 category. With $500,000 invested in designated areas, a wealthy foreigner can buy himself a green card. So, there’s nothing surprising about selling our precious UC slots to the highest bidder either. The only consolation is that if foreigners are willing to pay top dollar for a US education, we really have something worthwhile that foreigners look up to and desire.
For those priced out of college, loans to pay for college are the alternative. These loans may be direct to the student or in addition to that, parents make up shortfalls plus loans direct to the parents. Or, a 2nd mortgage on the house, or sell the house outright for the equity, or raid your retirement account. And of course, the last bastion of paying for college expenses is the path of least resistance: credit cards. This is what happened to client who now seeks bankruptcy relief.
Client is a single mom who actually makes good money as a registered nurse. She was married for a while. However, ex husband met his high school sweetheart in a 10-year reunion in their home country, and some old flames were rekindled by that chance encounter. When he came back home, emails and text messages flew back and forth, and soon enough, wife becomes the stranger in the triangle. Husband decides to file for divorce after the woman comes to visit Los Angeles and he becomes his tour guide for a month. Client is left with a house mortgage of $3,500 and a son who is now a freshman in college and a daughter who is a sophomore in college. Client’s gross annual income of $100,000, nets her $7,000 a month, half of which pays the mortgage. She is also paying for a car loan for son at $500 a month, and another car loan for daughter at $400 a month. She pays all car insurances, which is $500 a month. With her own student loans, she pays $900 a month. She borrowed $50,000 from her 401K to help her children pay for two years of college. The rest were covered by student loans direct to the children. Shortfalls on living expenses for both children who study in different parts of California are another $1,200, which covers most of the rent of her children for apartments. All told, she is short $1,800 a month and so she uses her credit cards to cover the difference. As a result, her credit card debt has ballooned to $75,000. She now pays a minimum $2,000 on the $75,000 to keep them current but figures she can still use another $30,000 if she maxes out her cards in the coming months.
Last month she started using check cashing, selling her paychecks in advance. She started falling behind on credit card payments 3 months ago. And now seeks a way out of her credit cards. But wants to keep the house and the two cars. The equity in her house is $100,000 so she can actually keep her house in a Chapter 7 case. If she continues paying for the two cars, she can also keep them. With all her expenses, she will qualify for a Chapter 7 wipe out of all her credit card debt of $75,000, and all her check cashing debt, thus saving her $2,000 a month, and keeping her entire net pay intact. After filing her Chapter 7 case, she will look for a 2nd job, and that income will help her children finish college on time.
When debts are no longer bearable, Chapter 7 will give you a fresh start without debt, give you peace of mind and set you on firm financial footing.
And, more importantly: “Cast all your anxiety on God because He cares for you.” 1 Peter 5:7.
* * *
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 appointme nt at 1000 S Fremont Ave Mailstop 58 Bldg A-1 Suite 1125 Alhambra, CA 91803.