“The FBI investigates the scam and tells the client they can get their money back if the money is still in the account.”
THE first clients are business partners who happen to be married to each other. They run a business that has been very profitable before President Donald Trump instigated his trade wars. From that business, they were able to generate good profits for several years that allowed them to buy a nice house in a very good neighborhood worth $1 million. Since they bought their residence, the fair market value of the house has appreciated a lot such that today they have at least $300,000 of equity in the house.
Their gross receipts before the trade wars started were $4 million a year. That’s a pretty good volume for any business venture. Profit margins would allow them to save at least $200,000 or $100,000 a year. That’s a decent profit margin, even though the margin is small because the volume is good. So, from the profits, they were able to realize the American dream of owning a nice house.
Here comes Trump with his trade wars, which directly negatively impact clients’ business. At this time, business for clients is bad. With Trump’s flip-flopping, you think it’s going to be resolved, but then the next day, you think it’s just going to keep on escalating until the whole world economy grinds to a halt. Nobody really knows what’s going to happen tomorrow.
Under the best scenario, Trump may be delaying resolution of his trade wars right after the Feds reduce interest rates. With those two problems resolved, the stock market would then explode upwards. He needs to have a red-hot stock market in tandem with a strong economy, to get him re-elected in 2020. I am really hoping that this is really what will happen, lower interest rates and a stock market boom because that would make all of us happier and richer.
The clients’ financial situation is they owe $150,000 of business credit line, $300,000 of credit cards, and about $100,000 of other unsecured debt. All of the $300,000 of credit cards was used for the business. So, they owe about $500,000 of unsecured debt. Now the problem is that they signed personal guaranties to secure the $100,000. There is no problem with the $150,000 credit line because that’s a company loan, which will be resolved by the bankruptcy filing of the company itself. However, the $300,000 of credit cards is personal debt even though they were used for business, and the $100,000 other unsecured debt is also personal liability.
Thus personal liabilities total is $400,000. This situation is not that bad. The company can get rid of the $150,000 by Chapter 7 without affecting the clients as individuals. But the $400,000 is something else. They cannot do a personal Chapter 7 to wipe out the $400,000 because they have non-exempt equity in the house of $200,000. They can do a Chapter 13 to pay $200,000 out of the $400,000 over five years interest-free and knock off the other $200,000. The problem is they will need to pay about $3,500 in the Chapter 13 plan every month for 60 months. That’s not easily done when your business is going south. And even if they both start working, paying $3,500 into a Chapter 13 plan will be tough.
So what clients need is what I call a “guerilla” plan to protect their house. This is what it really boils down to. They want to keep their house with its $300,000 equity intact while keeping the $400,000 creditors at bay and preventing these creditors from attaching their residence.
What’s the “guerilla” financial plan all about? Wouldn’t you like to know wouldn’t you? You can’t drop a nuclear bomb on the creditors with a Chapter 7 total wipe-out because clients will lose their house in the process. You’ll have to fight a war like the Vietnam War where they build tunnels to avoid carpet-bombing and fight in the jungle. That’s the “guerilla” war I refer to in dealing with the $400,000.
Senior loses $500K to inheritance scam needs Chapter 13 debt relief
The second client is going to be my oldest client at 94. Before him, my oldest client filed for Chapter 7 at age 90. This senior is still strong physically and would you believe, he still drove to my office That’s great. Unfortunately, he fell for the “you just inherited $20 million from your long lost uncle who just died.”
He received a letter and then a phone call from a European (so-called) executor of his long lost uncle. Apparently, the uncle had left an estate of $20 million with no claimants. So it was the executor’s responsibility to find his next of kin. Executor said that the client appeared to be a distant relative since they have the same middle family name. The client was invited to file an application, which was approved! The executor called the client from Europe and said that he had determined that the client was the rightful heir to $20 million.
To liquidate the estate (turn it into cash of $20 million); he needed $150,000 from the client. The client borrowed $150,000 from his retirement account and quickly wired the money over to the designated bank account. The executor then said he was going to bring the cashier’s check of $20 million to Los Angeles. Upon arriving at LAX, the executor calls the client and sends him a copy of the cashier’s check made payable to client, but says that the IRS has frozen the check because the IRS needs advance tax payment of $350K. Believe it or not, the client still borrows $350,000 from his retirement account and sends that over to the designated account.
The executor then disappears. The client reports his loss to the FBI. The FBI investigates the scam and tells the client they can get their money back if the money is still in the account. Of course, the account is closed. So that’s the story and it’s true not fiction. Once again, truth is stranger than fiction.
The client now needs Chapter 13 to handle his credit card debt. I tell him it’s going to be a five-year repayment plan, which he says is too long. He says all his friends are dying very quickly one by one. A friend who was only 59 just died when he was eating lunch. So anyway, we can make it a five-year plan and he can pay more than the plan payment so he can cut it shorter. He just doesn’t want to have liens on his house, which is now worth $1 million. On the plus side, he is completely healthy.
If someone calls you saying you just won the lottery or inherited $100 million, call me first, okay? I may save you a ton of money.
If you need debt relief, set an appointment to see me. I will analyze your case personally.
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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.