[COLUMN] What are your options if you can’t pay your debts?

IF you’re traveling east on the 10 freeway from Los Angeles, eventually you will end up somewhere in Florida. It’s a long drive to cover about 2,800 miles, but that’s where the 10 freeway will bring you. I know it’s expensive right now to make this road trip because gas prices are very high, between $5 to $6 a gallon due to the war in Europe in the last 3 weeks, but my point is that if you get on that freeway, you are going to end up in Florida. If you don’t want to end up in Florida, then don’t take the 10 freeway, right?

This analogy is similar to your finances. If you’ve been borrowing too much money in the past, then eventually that conduct will lead you to a default situation with your debt. Just like being on the freeway, borrowing too much money will make you end up not being able to pay your debt back. As the wise people say, it’s easy to borrow money, but it’s very difficult to pay it back. That’s just the way it works. So before you embark on the road to borrowing money, think twice.

If you are already in the situation of having too much debt leading to your inability to pay your debts timely, then what are your options?

Option one is to pretend nothing is going on and nothing else will happen, and hope that creditors will just forget about you. The problem with this option is that it doesn’t work. Once you are late in payments, your creditors will hound you day and night. They will pretend they care about you and offer you all kinds of payment plans. In other words, they still want to get paid. And when push comes to shove, they will start suing you to collect the money you owe them. If you are an ostrich, you will go for option one.

Even countries can default on their debts. Take Argentina for example. It has defaulted on its debt nine times since it became independent from Spain. The last default was in 2002. Creditors sued Argentina in New York and it came out with a payment plan. Now it owes more than $65B and it’s going to default soon again. Creditors will start suing again. Russia may soon default on its debts because the sanctions imposed by the West are crippling its economy.

Option two is to negotiate and settle your debts one by one. Sometimes clients tell me that they feel guilty so they want to negotiate and settle. So I tell them, realistically, MasterCard and Visa don’t give a hoot if you live or die. They estimate that about 7% of their clients won’t be able to pay them back so that’s just added into their higher interest rates. So don’t feel that there’s some kind of love affair going on between your creditors and you. There is none.

Option three is to wipe out your debt with Chapter 7 or reorganize your debt and pay a portion of it in Chapter 13.

Chapter 7 is what’s called the “fresh start” without accumulated debt. You get to keep most, if not all, of your assets that you are able to exempt under applicable law, get rid of all debt so you can become a productive citizen again. Let’s say you owe $60K in credit card debt. You own a house with $400K of equity in LA county. You’re paying for two cars. You have 2 kids, ages 9 and 12. Your household income is $80K a year gross. Assuming you are otherwise eligible for Chapter 7, you wipe out $60K of credit card debt (they are discharged by court order), keep your house and cars and everything else you own assuming they are exempt. Your income remains at $80K a year gross but you don’t have to pay the $60K credit cards anymore. You get a “fresh start” and can start saving money again. You need $1,800 a month to keep $60K of cards current every month. After wiping the $60K out in Chapter 7, you don’t have to set aside $1,800 a month anymore to pay your cards, you give yourself $1,800 in savings every month instead.

On the other hand, if for some reason, Chapter 7 is not for you, then explore Chapter 13. In Chapter 13, you might only have to pay $100 a month for 60 months, or 10% of the $60K of credit cards. Every case is different. It may not apply to you depending on your circumstances. After paying $6K, the court will discharge the rest of the unpaid $54K. That’s still a great repayment plan, isn’t it?

Praying always helps

It also helps to pray to our God, Jesus, and the Blessed Mother Mary for divine protection against the virus and financial problems because we have a God who loves us and showers us with infinite mercy. All we have to do is be humble ourselves and pray.

What is the current proof that God and Jesus are divine and all powerful? I refer you to exhibit A, the incorruptible body of Carlo Acutis!

Current ongoing physical proof God is almighty – Incorruptible body of Carlo Acutis who died in 2007 at age of 15: Look at the incorruptible body of the blessed Carlo Acutis who died at 15 in 2007. You can look at his body in Rome, Italy, now 14 years after his death. He looks like he’s just asleep in his jogging suit and rubber shoes! That is a perfect example of an ongoing sign on earth that the God of Moses, our God, my God, is almighty and all-powerful that He even suspends the natural laws of biology and physics without any effort. He resurrected His one and only beloved Son from death on the cross. Indeed, He has power over death.

I have actually thought, “What would the other religions believe if they actually saw the incorruptible body of the blessed Carlo Acutis? I think even Buddha, if he were alive today, would truly believe that Yahweh is the one True God.” No need to think about reincarnation and nirvana because his incorruptible body is available for all to see in Rome, Italy. We won’t need any kind of explanation on the efficacy of modern-day mummification. Come on, man, that’s all bull. The truth is in plain sight. Believe your own eyes, that the one true God is all-powerful, and His name is Yahweh, “I am who am.” He is the alpha and the omega, the beginning and the end.

Seven of my high school classmates passed away in 2021. They have all gone to meet their creator. I would like to mention their names here: Ricardo A, Victor Y, Jerry L, George C, Jimmy G, Edward N and Ricardo D. Three died of COVID, one slipped and fell in the bathroom, one of a heart attack, two of cancer. I pray all of them are in heaven with our Lord enjoying eternity with their loved ones.

“Don’t worry about anything. Instead, pray about everything.” Philippians 4:6.

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Disclaimer: None of the foregoing is considered legal advise 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.

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