THE client is 72. He still works his normal job and makes about $3K a month. He also receives social security of $1K. So, his total income right now is $4K. He tells me that he is tired of working. His wife doesn’t want him to work anymore. His wife retired ahead of him at age 65, and now receives her social security of $800. She doesn’t work anymore.
I ask him what’s the problem? He says they have the following debts:
- He owes $30K of credit cards;
- He owes $10K of car repo deficiency;
- His wife owes $12K of credit cards.
Minimum payment on his credit cards is $1K a month. Minimum payment on wife’s credit cards is $400 a month. Total minimum credit cards payment for the household is $1,400 a month. Net income for the household is $4,400 a month. They don’t own a house.They rent for $1200 a month, just a one-bedroom apartment. Utilities and food is about $700. They have a 2013 Lexus 250 IS that is fully paid. They only have one car. They had a new SUV but that was repossessed last year, thus the $10K repo deficiency. Car insurance is $120 and gasoline and car maintenance is $400. Cable TV and cell phone is $200. They contribute to their church $100. They send $1000 a month for the medical expenses of their adult son who lives abroad. He doesn’t have medical insurance, and has diabetes T 2. His illness has taken a bad turn recently. Although only 45, he now has to have dialysis 3 x a week. And, last month, his foot was amputated due to gangrene from a wound that would not heal. He accidentally cut himself while cleaning his backyard. He stepped on a nail that went through his flip-flop. The nail was rusty and made a nasty wound on the sole of his feet.
The wound became infected with MRSA, which is a kind of bacteria that does not respond to antibiotics. The wound and infection became full of pus, then, it became gangrene. Panic time. Doctors suggested that they amputate his foot to save his leg. Is there a choice? What a difficult position to be in. Lose your foot to save your leg.
So, with the $1K that they send to their son, their total monthly expense for necessities is $3,800 vs. their net household income of $4,400. Hence, they still have an extra $600 a month, BEFORE they make the minimum payment for their credit cards of $1,400.
Well, at this point, their short $800 because they need $1400 for minimum card payments but they only have $600 left. And who knows, their son may need more than $1K a month for medical expenses with his rapidly deteriorating health. We pray to our God Almighty through his Son, Jesus Christ, we’re never faced with this kind of sad situation. Imagine having your son or daughter having to choose with amputation of the foot to save a leg and being on dialysis. That’s too much to bear. You would probably cry your heart out everyday.
I refer you to Psalm 91: Whoever goes to the Lord for safety, whoever remains under the protection of Almight, can say to Him ‘You are my defender and my protector. You are my God; In you I trust… When they call to me, I will answer them; When they are in trouble, I will be with them. I will rescue them and honor them. I will reward them with long life; I will save them.
Obviously, something else will now have to be chopped off. The credit cards have to be chopped off to free them of having to pay $1400 a month. Anyway, they have paid this minimum of $1400 for the last 10 years. They have paid a total of $168k for the last 10 years to keep $42K of credit cards current. So why do they still owe the same $42K of credit cards today? Because that’s the way it works. It’s a great deal for mastercard and visa but it SUX totally for clients. If they had wiped these cards out with Chapter 7 ten years ago, they would not only owe $42K today in cards, they would have at least $250K in savings that will give them extra income of say 7%, giving them income of $17,500 a year, or $1,500 a month, which they can use to travel around the world, or just reinvest the income.
I forgot to ask if their son has children. If he does, clients may need to help their daughter in law take care of their grand children if their son dies. It would certainly help to have an extra $1,500 a month for the care of their grand children abroad. $1,500 a month abroad in a third world country goes a very long way towards good care of their grand children abroad. Their son will appreciate this very much since he won’t be able to take care of his children anymore.
Here’s the other problem clients are facing. He is about to stop working his regular job that gives him a gross of $3K a month. You don’t have to be an accounting major to figure out what the loss of that income will mean. There will just be no money available to make the minimum payment of $1400 a month to keep the credit cards of $42K current. No way, just, no way. It’s time to get rid of the $42K with a Chapter 7 wipe out. Should have done it ten years ago. Now, clients really must file to get rid of the $42K. It’s like the foot has to be chopped off to save the leg. Such is life. So I refer you to Psalm 91 again because that Psalm was written by Moses who is much beloved by our God. So it carries a lot of weight and truth in it.
If you need debt relief, please set an appointment to see me. I will analyze your case personally.
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Disclaimer: None of the foregoing is considered legal advice for 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 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.