Single client seeks BK relief
CLIENT is 48 years old, single and works as a licensed vocational nurse. She used to gross $75K a year with two jobs but recently lost the 2nd job, which used to pay her $24K a year. She owes $80K of credit card debt, which requires a minimum of $2,400 a month. Her rent is only $800 a month, and she pays for a car at $500 a month. With the loss of the 2nd job, she is now unable to continue minimum payments on the $80K credit card debt. Apparently, all the income from the 2nd job had gone to keeping the $80K credit cards current for the last 5 years. Therefore, in the last 5 years, she paid $144,000 of interest to keep her credit cards current. But today, she still owes the very same $80,000 of credit card debt. That’s not fair, but that’s the way credit cards work. Minimum payments to keep cards current go towards principal. A minimum amount perhaps goes to principal which is insignificant in reducing the principal balance owed. In addition to $80K of credit cards, client also owes back taxes of $15K to the IRS for 2011 and 2010 because her job pays her with a 1099, no deductions. Since she wasn’t disciplined enough to pay off the IRS in full when the taxes were due, income taxes owed for those two years became bigger as time went by.
Her current income now from a single job is $5K a month, without deductions. And for last year, she will owe $6K to the IRS that she has not yet paid. Last week the IRS sent her a NOTICE OF INTENT TO GARNISH her bank deposits and wages. Last month, two credit cards threatened to file lawsuits for collection. In other words, client needs debt relief badly and urgently.
I suggested a Chapter 7 case to wipe out all $80K of credit card debt, and $15K owed to the IRS for 2011 and 2010. Thus, giving her a fresh start in life without burdensome debt so she can be productive again. Her credit score was low because of the past due cards, and taxes owed to the IRS. So when she told me that she was worried that her credit score would be destroyed by bankruptcy. I informed her that, on the contrary, when she files her case, her credit score would be 500, which is only slightly lower than her current credit score of 560. But with bankruptcy, her credit score would increase every year if she handled new credit in a timely manner. On the 2nd year from filing, she would probably be at 620 as long as she paid her car loan on time, and on the new cards that she will definitely be offered right after getting a discharge, she should get those, use them, but pay them off in full. With that track record, in the 3rd or 4th year, she would probably be at 670. On the 7th year, she would be at 730, which is very good, and on the 10th year her credit score will be over 800 again with no record of the bankruptcy filing. On the other hand, if she did not discharge all her debts now with a Chapter 7, her credit score will be in the zombie zone for years and years. As an added bonus, her $15,000 of taxes owed to the IRS would also be discharged, so she will not owe the IRS anything anymore, except for the upcoming $6K for 2014.
Client decided to file for Chapter 7 relief immediately. This is the right decision considering she is now 48 years old. So, if she gets a 2nd job again, all of that income will be saved for her retirement.
Parents qualify under Obama amnesty
The OBAMA AMNESTY which allows people who are here without legal status provided they have a qualifying child who is an American citizen or legal permanent resident, to get a work permit valid for 3 years and renewable for periods of 3 years per renewal is getting into higher gear because the USCIS was directed to start accepting applications by February 19, 2015.
Clients entered the United States with an H1-B visa to work here as an engineer. Employer agreed to convert his H1-B status into permanent residency through the labor certification process. Unfortunately, employer’s business ran into financial problems and had to let client go. Unable to get another employer to continue his H1-B and labor certification within the requisite time, his H1-B status expired and he eventually became out of status. He married 10 years ago but his spouse is undocumented because although she entered with a passport and had an I-94, she lost both the passport and I-94 a long time ago. As a result, she is undocumented. However, they have an 8-year-old daughter who was born in Los Angeles.
Client, although an engineer, works as a building maintenance person because he doesn’t have a work permit. Wife does not work because she has no work permit either. Since American citizen daughter was born before November 20, 2014, parents have continuously resided here since before January 1, 2010, are physically present here on November 20, 2014, have no lawful status on November 20, 2014, and are not criminals, both husband and wife will qualify for the Obama amnesty for work permits valid for 3 years and renewable. They can travel out of the country for specific reasons with an advance parole, but I do not recommend that they assume that risk because there is always that 1% chance denied re-entry at port by the immigration officer. That officer has the discretion to deny entry even with an advance parole for whatever reasons he has. So, why take that risk at this time?
“Even to your old age and gray hairs I am HE, I am HE who will sustain you. I have made you and I will carry you; I will sustian you and I will rescue you.” Isaiah 46:4.
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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 appointme nt at 1000 S Fremont Ave Mailstop 58 Bldg A-1 Suite 1125 Alhambra, CA 91803.