LET me give you the background on this case. The husband is 81 but still looks active. He is slim and sprightly. The wife is 79 and looks nervous. Normally, spouses are on the same track and agree with what has to be done. But in this case, I’m not sure what is going on.
The wife owes between $20,000 to $30,000 credit cards, which are all past due. One card has sued her and she has agreed to a stipulated judgment promising to pay $150 a month. Other cards are threatening to sue. They call her every hour to collect their pound of flesh. The wife looks really worried. She says she hides under the table when they call. I guess she can’t take the stress caused by these credit cards.
She says that she was able to pay these cards until she stopped working for two years. She suffered some kind of trauma in her work and received disability payments for a while. She was a caregiver in a hospice and her patient had violently killed himself in front of her. This scene had caused her extreme mental anguish. She could no longer work as before. This work-related trauma qualified her to receive temporary disability, which recently expired.
She did not feel like going back to work. She received social security of $700. Well, if she owed $20,000 credit cards, she would need at least $750 to keep $20,000 of credit cards current with minimum monthly payments. In other words, all of her social security would have to be used to pay credit cards and she would still be short $50. Where would she get $50? All eyes go to her husband.
The husband has not given her the $50 so eventually, all her cards became past due. You know what happens when cards become past due, past due amount plus penalties make the bad situation even worse. As she said, they call her every hour to collect. One has sued her. They threaten to sue. They want all of her social security. What struck me the most was her statement that she had to hide under the table when they call. I believed her. She was clearly stressed out. I empathized with her. At her age, she should just be collecting social security and enjoying what’s left of her life, the golden years. She should not be living each day cowering in fear. Her life sucks.
I’m wondering what’s going on with the husband. He says he also owed a bunch of cards. His social security is $2,000. He says in addition to social security, he still works full time. But the employer is not doing too well. Even though he owns 25% of the business, his paycheck of $2,000 does not come in consistently. There are times when the paycheck is delayed and he doesn’t get paid.
It looks to me that there’s more stuff going on here, although it’s my policy not to get involved in matters that are between husband and wife. I think the wife doesn’t want to be harassed by her creditors anymore. She can’t take the stress of creditor collection calls every day and every hour. In California, we only use tables to hide under during an earthquake. We don’t use them to hide under when creditors call to collect.
The wife cannot do Chapter 7 because they own their house, which supposedly has more than $175K of equity. Being seniors, their homestead exemption is $175K. In Chapter 7, there’s a big risk they might lose their house to the Chapter 7 trustee who will sell it and give them $175K in cash and use the rest to pay off her credit cards. It doesn’t make sense to lose your house because of credit cards. So, I will not file a Chapter 7 for them in this case. I will only file a Chapter 13 with the smallest possible plan payment so that there is no risk of losing the house.
The wife obviously cannot pay her credit cards. She needs her $700 of social security to buy necessities. So why won’t her husband help her out in any way he can, like pay her credit cards? First, let me say that this is a matter between them as husband and wife. It looks at initially to me that all their expenses are separate. She pays her own expenses and he pays his own expenses. A de-facto pre-nuptial agreement when it comes to expenses. Second, there seems to be something that’s not being said. I can tell from the bodily movements.
So, eventually what has not been said is now said. The husband is paying $1,000 a month for a $250,000 term life. He believes that when he dies, the $250,000 will help the surviving wife pay down their mortgage of $400,000.
The wife doesn’t know what to think. All she knows is that since she stopped working, she’s been and continues to be a nervous wreck because of credit card debt. Her entire social security benefits are not enough to cover minimum monthly payments on the cards.
I can only say that Chapter 13 will give her peace of mind, immediately. And, only God knows when we die. “Death comes like a thief in the night.” 1 Thessalonians 5:2. The husband plans to die ahead of the wife so she can get her $250,000 from insurance. But who knows, because of all her stress, the husband might outlive her. If she dies ahead of him, who gets the $250,000, and what’s the use of paying down the mortgage? Many couples who have been together for a long time die within a week of each other because the surviving spouse is heartbroken and has no will to live on without the other spouse. This is certainly a question that none of us can answer so we rely on the Bible, the word of God for an answer. Even the Pope doesn’t have any idea when his time is up.
Whatever the outcome and the future, it’s better all around for peace of mind, not to have these credit cards around to bother you when you get older, right? So get rid of them now if you can with Chapter 7 or Chapter 13. You don’t want them getting half or all of your social security or pension when you retire.
Lastly, all of us will have to leave this world, sooner or later. We have frail and imperfect bodies because of sin. Without sin, we would have perfect bodies. We would never get sick and we would never die. True. Mortality is our human condition because Adam & Eve ate of the forbidden fruit. Fortunately, Jesus died for us so we can have eternal life in heaven with our God who loves us so. So it’s all good. Death for us is not the end. It’s the beginning.
* * *
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 20274 Carrey Road, Walnut, CA 91789 or 1000 S. Fremont Ave., Mailstop 58, Building A-10 South Suite 10042, Alhambra, CA 91803.