THE client is 64, a young senior.
I say young because I consider seniors in their 60s as still active and robust. Except for more white hair, they still feel like they are 30. The problem with being in the 60s is that 70 is just around the corner. Now when one becomes 70, after 10 years, you become 80.
The client says that his net income is $3,500 and that he is separated from his wife. His rent is $600 for a room. He sends money to his brothers and sisters in his country of origin. The problem is that he owes $30,000 in credit card debt. He pays a minimum of $1,000 a month for the credit cards. He also has a car payment of $350. We don’t have to do more calculations here. The minimum payment of $1,000 for credit cards is almost a third of his next income. That is just way too much. He wants to get rid of his credit cards now that he is 64 so he can start saving some money.
Well, it’s a little late to start saying money now but at least with the discharge of all of his credit cards, he can save $12,000 in the next 12 months, and $24,000 next year, then $36,000, and then $48,000. So when he turns 69, just before he becomes 70, he can have $50,000 saved up which he can use any way he wants. This is a lot better than keeping these cards, paying them $50,000 for the next four years, then still owing them the same principal of $30,000 when he turns 70. So, this is really a no-brainer, isn’t it?
Would he rather have $50,000 in cash and not owe anything at the age of 69, or throw away $50,000 in minimum payments and still owe $30,000 credit cards at age 69? He asks if his brother, whom he used as a reference for a personal loan and did not sign a personal guaranty, is legally liable for his debt if it is discharged in bankruptcy. Of course not. The brother can only be made liable for his debt if the brother signed a written personal guaranty. Without a signed personal guaranty, the brother used as a reference cannot be sued because he has no legal liability to the creditor of the client.
Chapter 7 to discharge $45K credit cards
Next, the clients are husband and wife who are 72 and 71, respectively. The wife made sure that I understood that she was only 71 and is one year younger than her husband who is 72. Yes, I got that. One year makes all the difference. I told her that I stopped counting 20 years ago and advised her to do the same. It’s useless to keep counting, what’s the big deal anyway? Who wants to know that you are now one year closer to leaving this earth; certainly not yourself. Look at the picture of the Indonesian guy who is the oldest man alive at 145. I mean what can you do at 145? You’re practically a cadaver and blind. Can’t hear anything. The quality of life is just zilch.
The clients owe $46,000 in credit card debt. Their social security is $3,000 a month. Rent is at $1,200. They have $1,800 left but their credit cards need a minimum of $1,500. How are they going to eat and pay for other necessities if they continue to pay $1,500 for credit cards? They can grow their own vegetables in their backyard — if they had one. They rent an apartment with no backyard.
The husband says that he has all kinds of muscle pain and has a pacemaker, so that kills his plan to drive for Uber so he can raise another $1,500 to pay for their credit cards. He says they have already lived a full life, having traveled all over the world, using the cards. But they have paid the cards for the last 20 years a total of $360,000, yet they still owe the very same $46,000 of credit cards today. I told them that they should have done their Chapter 7 20 years ago, so today they would have $360,000 in their portfolio earning them at least 5 percent or $1,500 a month, or $18,000 a year. That certainly helps now, instead of paying them a small fortune and still owing them the same amount of $46,000. They should have gotten rid of these cards a long time ago.
They immediately decide to file for Chapter 7 to discharge the $46,000 of credit cards. Peace of mind without credit card payments is what they need now at 72 and 71.
Business owners need Chapter 7 to discharge $200K loans and wage garnishment by SBA
The last clients were business owners. They are also seniors at 60 and 61. The owned a business that closed down in 2007. When the business closed, the company, which is an S corporation, owed a Small Business Administration (SBA) loan of $49,000, which is now $89,000 because of the accrued interest.
The SBA started to garnish the wife’s wages last week. She didn’t like the garnishment. I can’t blame her — who wants to get your hard-earned wages taken at the rate of 25 percent of gross? As the POTUS says, that is a “bigly” deduction, NOT FAIR! And NOT NICE!
In addition, they owe $90,000 of credit card debt plus another $30,000 of unsecured business debt. They ask if it makes sense to settle the accounts owed. I say what for? With a Chapter 7, you can wipe out all of the $210,000 debt, start fresh again with zero debt, all it costs is the attorney & filing fees, which are very reasonable. The settlement in half, for instance, would still cost $120,000, which they don’t have. I mean, the settlement is very expensive compared to Chapter 7 legal fees. You wipe out $240,000 for almost no cost except for legal fees. That’s the American way.
Look at the POTUS, his companies filed bankruptcy four times and he still the commander-in-chief. That is one smart dude. VERY SMART!
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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.