Chief executives of the BIG 3 went to Capitol Hill yesterday to plead for $25 billion of federal aid. Wait a minute. Just who are the BIG 3? Are they Manny, Moe, and Jack, aka, the Pep Boys, or Larry, Moe, and Curly Joe, aka the 3 stooges? Kidding aside, the Big 3 refers to Ford Motors, GM, and Chrysler, the Detroit carmakers. The once mighty titans of industry have been reduced to mendicants for federal aid to assure them of one last chance to become profitable again. Without new infusion of money, their cash reserve is good only for another quarter of operations. Thereafter, there is no money left to continue operating.
What or who is to blame for what is going on in the car industry? Who knows? The CEO’s testified recently that they spent too much money making big SUVs and large cars demanded by the public, and made a lot of money doing it. But they have fallen victims to the credit crunch and the new demand for fuel-efficient cars. So they have large inventories of SUV’s and trucks that are just sitting in their warehouses and dealer lots unsold. At the same time, their labor costs for union workers is sky high.
They also testified that if they fail, 3 million workers directly and indirectly related to the car industry in the United States would lose their jobs. Further, they testified that Bankruptcy would not be the preferred way of reorganizing their businesses because the public may not buy cars from companies that are bankrupt. In other words, they want a bail out instead of bankruptcy. If they do get federal aid, what this means is that if big businesses fail in a big way and they mess up big enough, the government will come in to bail them out with our tax dollars, and save them from bankruptcy. For the rest of us, if we fail financially and incur too much debt that we can no longer pay, we would have to seek relief and a fresh start through bankruptcy. But whether it is a bail out or a fresh start through bankruptcy, it is clear that something drastic has to be done, to get rid of accumulated debt in order to become financially healthy again. If your arteries are clogged up, you have no recourse but to get a bypass or to put a stent in those arteries, so your heart can get enough blood and oxygen. Otherwise, you will suffer a heart attack.
Fortunately, if you are an individual with too much debt, you do not have to plead with the government to bail you out of your financial mess. Federal aid already exists for you. Federal bankruptcy law allows you to get rid of your accumulated debts while allowing you to keep most if not all of your assets, thus giving you the proverbial "fresh start" so you can become a productive individual again. You will not need a new infusion of cash from bail out funds. Take client’s case for instance. He has racked up $100,000 of credit card debt, and over a million dollars of secured debt for 3 rental houses that he can no longer pay for. Each rental house was purchased with zero down and 80/20 financing. Thus, each rental had a second trust deed of $80,000 each. Since he could no longer pay for the mortgages, he would still owe $80,000 on each rental or $240,000 even if all rentals were eventually foreclosed. Therefore, with credit cards and rental foreclosures, he would owe a total of $340,000 of unsecured debt. Should client try to spend the rest of his life paying of $340,000, or should he seek bankruptcy relief so he can start fresh again without accumulated debt. In a chapter 7 petition, client would be able to get rid of all of his debts while being able to keep all of his assets, his residence, furniture, bank & retirement accounts, including his job and income.
If you need debt relief, contact my office. 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., Bldg. A-1 Suite 1125 Unit 58, Alhambra, CA 91803.
( Published November 22, 2008 Los Angeles Asian Journal p. C6 )
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