THE client is 50 and has two grandchildren living with her who are teenagers still in high school. She is married but separated. She is not divorced from her husband. They still live in the same house but they no longer treat each other as husband and wife. She takes care of her two grandchildren because her daughter is not able to care for them.
The daughter has her own problems and lives by herself and is not able to care for her two children much less herself. So the client took over the responsibility of raising her daughter’s son and daughter. She splits the rent with her husband and they take care of their own expenses. Pretty much, they have separate lives.
She works in the health care industry as a certified nursing assistant and grosses $3,500 a month. This is not enough for a family of three with two teenagers. She has a 2014 Camry which she bought used and still pays $260 a month with three more years to go. When she came to see me she said that she owes $60,000 of credit cards, and she’s thinking of consolidating them. I said what for? Obviously, she can’t afford to pay $1,900 a month of minimum payments every month to keep $60,000 of cards current. Maybe the consolidator might be able to reduce that a little bit to $1,500 with lower interest and a payment plan negotiated by agreement with her creditors. If she were grossing $12,000 a month, maybe she could actually set aside $1,500 a month, but this is the real world, not some fantasy world.
Now, with $3,500 gross monthly, her net take-home pay is about $3,000. That’s really not much and barely enough to pay for rent, food and other living expenses for a household of three people.
So, I advised her to file for Chapter 7 and just wipe out the entire $60,000 of credit cards. “Start fresh with no debt,” I told her. It’s the right decision. She was nervous. I told her not to worry about it because it was the right thing to do. We went through her telephonic hearing last week with the Chapter 7 trustee. He asked for some more documents at the hearing but said that if those documents were submitted before the next hearing set for next week, then he would just take the matter off the calendar next week if he had no questions about the documents.
Today, I informed her that the trustee called to advise that he had no further questions and that the hearing was concluded and no need to appear next week as he was taking that off the calendar. She then informed me that her hours had been reduced by the hospital and that her pay had decreased and that she felt really fortunate that she did not go for consolidation, and instead got instant relief with the Chapter 7 case. She did not have to pay anything on the $60,000 credit cards at all, and she kept all her assets. With her decreased income the $1,500 consolidation was a very, very big burden for her and her family.
She said that she also felt fortunate that she was assigned to give in-home care to patients instead of caring for patients at the hospital because there were a lot of COVID-19 cases in her hospital and she was afraid of getting sick. If something happened to her, then her grandchildren would have no one to turn to and they could not take care of themselves yet. Her older grandson at 15 had been working part-time after school at a local restaurant, but got laid off when the restaurant had to close down because of almost no business because of the lockdown.
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Disclaimer: None of the foregoing is considered legal opinion and there is no attorney-client relationship created between the reader, any third party and attorney.
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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 20274 Carrey Road, Walnut, CA 91789 or 1000 S. Fremont Ave., Mailstop 58, Building A-10 South, Suite 10042, Alhambra, CA 91803.
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