“There are special laws that allow middle class families to avoid paying thousands of dollars out of their pocket monthly for nursing home care, assisted living care and home care. So, why get financially devastated when a health crisis happens that cannot be avoided?”
CHAPTER 13
Client is 68 and relies on social security of $800. Wife is 55 and is a self-employed health professional. Wife, although a health professional, only grosses $20K a year. And I thought everyone in the health industry was raking it in. They bought their residence 20 years ago for $300K. It is now worth $700K. They have a mortgage balance of $200K. So they have $500K of equity. That’s not bad at all. However, because their income is low, they have not been able to pay their mortgage of $1200 monthly for 10 months.
They come to me with a notice of auction sale for next week. Husband asks if a loan modification at this stage will stop the foreclosure. I said no. Although there is a law that says so, in reality, it doesn’t stop the foreclosure. He also asks me if I can sue the bank for predatory lending to stop the foreclosure. I said no. I said you can sue the bank but its not going to stop the foreclosure. I said the only thing you can do to stop the foreclosure right now is the file a Chapter 13. You can then pay the default of $12K at the rate of $200 monthly and stop the foreclosure for 5 years as long as you are timely making the plan payments to the court. The problem, I said, is that next month, you have to resume the current mortgage payment of $1200 for the month of October so that in October, you actually need $1200 for the current portion of the mortgage and another $200 for the plan payment. The total of $1,400 is $200 more than you mortgage of $1200 which you have not been able to pay for ten months, but it does give you enough breathing time to figure out what you can do next. The foreclosure of September 8 will not push through because of the Chapter 13. Therefore, your house is safe in the meantime.
I suggested that he can sell the house while he was on the Chapter 13 so that he can maximize the realization of his $500K of equity, then just purchase a condo with the $500K so he won’t have to pay for a mortgage anymore, and he will probably have $100K of cash left as emergency funds. I suggested another way to pay off the mortgage but I will not mention it here. What’s important is that the filing of the Chapter 13 now will stop the September 8 foreclosure and give him enough time to figure out what his next move is going to be. Otherwise, if he doesn’t do anything and keeps on dragging his feet and not take the right step which is filing the Chapter 13, he will end up losing his house on September 8. If his house is foreclosed on September 8 and there are no bidders for the house at auction, the bank will bid the balance of the loan of $200K, and in that situation his $500K equity will evaporate into thin air. Maybe a bank employee will bid slightly higher than $200K, then resell the house at $700K and making a half million profit overnight at the expense of client who I must say is one of the most stubborn people I have met. It’s as if his stubbornness will solve the problem of saving his house.
Paying for/eliminating nursing home costs
Client is 67. He has been fairly blessed with good health until recently. He owns a house with $300K of equity. He has a retirement account of $500K. While going for his daily morning walk with his dog, he suffered a massive heart attack. Now, he cannot take care of himself. His wife and family are worried that that they would have to place him in a nursing home. They checked around and found a nice nursing home with first class surrounding and facilities. They would like to put him there. But the monthly expense for that nursing home is $8,000 a month. At that rate, they would burn through the retirement account of $500K in five years. And may even have to sell their house.
His wife and family are very concerned that this catastrophe will devastate them financially. I present them with a legal solution that will let them keep the $500K of retirement account and keep their house. At the same time, the solution will provide grants and subsidies that will pay for the $8,000 monthly as long as he needs nursing home care. I can get them the care that client needs without bankrupting the family. There are special laws that allow middle class families to avoid paying thousands of dollars out of their pocket monthly for nursing home care, assisted living care and home care. So, why get financially devastated when a health crisis happens that cannot be avoided? If your loved one is in this situation now, or you need to do advance planning maybe a couple of years from now, come and see me. I can help you solve this problem legally and allow you to keep all your assets while getting the nursing care that your loved one needs.
“SEE, THE FORMER THINGS HAVE TAKEN PLACE, AND NEW THINGS I DECLARE; BEFORE THEY SPRING INTO BEING I ANNOUNCE THEM TO YOU.” ISAIAH 42:9
* * *
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.
