At 90, this senior was my oldest client. It all came crashing down on him during his golden years, unfortunately. He had a business that never seemed to make any money, but he kept doing business simply because it gave him something to do every day.
So he had $34,000 in credit cards and a repo deficit of $16,000 for total unsecured debt of $50,000. It’s a big debt when you’re 90. He was getting about $2,000 a month from Social Security pension, but he had already sold his house with zero net proceeds two years ago. He has three grown children who are gainfully employed, but he just wanted to live on his own, and I guess his three kids pretty much left him alone. He married twice and divorced twice and was already single.
His ex-second wife offered to let him live with her in her house. She still loves him. For unknown reasons, ex-wife no. 2 put it on a title to his house! Oops. His house already has a very high equity, over $500,000. She has her own adult children with her first husband. She had no financial problems until he moved in with her. I won’t go into details but she ended up losing $300,000 from her 401K. Both believed a scam artist who promised a $10 million pot of gold at the end of the rainbow, if only they shelled out more than $300,000. Wow, what a deal of deals – for $300,000 you get $10 million! Let’s not get into that now. Suffice it to say, if it’s too good to be true, then it isn’t. When someone makes you this kind of offer where you have to give money up front to get a big deal, walk away and forget about it. It’s a scam.
For example, for old ladies, if you suddenly meet a guy overseas who wants to marry you and he says he’s a white guy who’s second cousin to the Queen of England, and he send you a picture of a white guy who looks like Tom Cruise in a British Royal Air Force military uniform, better keep your money in the bank! The fool and his money will soon be separated. If you actually use your credit cards to send her $50,000, come see me for a chapter 7 or a chapter 13, okay? You will never see your Prince Charming again and you will never see your $50,000 again, not in this lifetime.
Putting the senior client on title to his home was a big mistake because instead of being able to file for Chapter 7 relief, he can only qualify for Chapter 13 to handle the $50,000 in debt. We could have done her Chapter 7 first and cleared the $50,000, and then if she still wanted to, she could put her name to the title six months after the Chapter 7 release date.
But she put it on the title as soon as he moved in with her. This fact changes the whole ball game in terms of getting the proper bankruptcy relief. When he first came to see me, I knew the $50,000 really irritated him to no end, even complaining that he owed $16,000 in repo deficiency when the car was returned to the creditor. Sorry, that’s how contract law works. I can’t blame him for being stressed. Who wants to pay off $50,000 in debt at 90? No one I know wants this kind of financial stress at any age; what more when you are already 90 years old and you don’t know how long you have left on this earth?
The client then fell ill with liver cancer and had only a year to live. The court upheld his Chapter 13 case last week. Shortly after his case was confirmed, the client died. Rest in peace and I’m sure he is now happy in heaven with God the Father, God the Son, Jesus Christ and God the Holy Spirit.
So what happens to his case in Chapter 13, and more interestingly, what happens to the house of his ex-wife who bears his name? And what happens to the entire $50,000 unsecured debt he was going to pay off through Chapter 13? We will discuss this later.
It really is better to get rid of your debt sooner rather than later. Don’t wait too long. If you can qualify now for Chapter 7, do it now. It’s harder everywhere if you wait until you’re 80. The mind is willful but the body is literally too weak at 80. I have another elderly client who was only 74 but was on dialysis. He also died late last year, just as the virus began to emerge. In his case, his co-debtor widow continued the plan payments. She moved in with her son and just rented their house. It had a default of approximately $30,000. That was what Chapter 13 was all about: to save the house from foreclosure. It was the right decision as the net worth is now around $200,000 and she is now getting rental income from it which is net positive after the mortgage is paid. For her, things worked out. Her son asked her to move in with him, his wife, and his family, and she was able to protect her home from foreclosure and benefit significantly from the increased net worth. But of course, even if there was this risk of dying, her husband was on the waiting list for a kidney transplant. The husband had a major heart attack the night before he fell asleep. It was too late when the paramedics arrived, he was gone.
My classmate is still in a coma two months after being infected with the virus. He is still on a ventilator and has suffered several mini-strokes. We are praying for a miracle to bring him fully recovered and conscious again. “Ask and it will be given to you.” “Knock and the door will open. If it is God’s will, He will bless my friend with a miracle of complete healing. His wife and family still need him.
Business owner with multiple restaurants needs Chapter 7 relief
The next client is only 50 years old. Believe me, it’s young. It has three restaurants. He sold one recently, but one of his former employees sued for years of unpaid overtime. He wants to close the 2nd restaurant which is no longer profitable due to confinement. The problem is that he’s personally on the commercial lease at $7,000 a month for five more years. He is therefore liable for $500,000 in unpaid rent. His third restaurant is still doing well despite the confinement. He wants to keep this restaurant. So, that’s not unusual these days with the pandemic still untamed here in our beautiful country. This client needs Chapter 7 relief for a fresh start without debt but with the ability to continue operating the third restaurant.
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Disclaimer: None of the above is considered legal advice to anyone. There is absolutely no attorney-client relationship established by reading this article.
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented over 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.