[COLUMN] Customer relieved she chose Chapter 7 instead of bundling $60,000 credit cards —


THE client is 50 years old and has two grandchildren living with her who are still teenagers 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 cannot take care of them.

The girl has her own problems and lives alone and is unable to take care of her two children let alone herself. So the client took on the responsibility of raising her daughter’s son and daughter. She shares the rent with her husband and they cover their own expenses. Pretty much, they have separate lives.

She works in the health sector as a certified practical nurse and earns $3,500 per month. This is not enough for a family of three with two teenagers. She has a 2014 Camry that she bought used and is still paying $260 a month with three years to go. When she came to see me, she told me she owed $60,000 in credit cards and was thinking of consolidating them. I said why? Obviously, she can’t afford to pay $1,900 a month in minimum payments every month to keep $60,000 worth of cards up to date. Maybe the consolidator might be able to reduce that a bit to $1,500 with lower interest and a negotiated payment plan with their creditors. If she was making $12,000 a month, she might be able to set aside $1,500 a month, but that’s the real world, not a fantasy world.

Now, with $3,500 gross per month, his net take home pay is around $3,000. That’s really not much and barely enough to pay rent, food and other living expenses for a household of three.

So, I advised him to file for Chapter 7 and wipe out the entire $60,000 in credit cards. “Start over debt-free,” I told him. It’s the right decision. She was nervous. I told him not to worry because it was the right thing to do. We went through his phone hearing last week with the Chapter 7 trustee. He asked for more documents at the hearing, but said if those documents were submitted before the next hearing scheduled for next week, he would withdraw just the matter of the calendar next week if he had no questions about the documents.

Today I informed her that the trustee called to inform her that he had no more questions and that the hearing was over and there was no need to appear next week because he took that off the schedule. She then informed me that her hours had been reduced by the hospital and her salary had gone down and that she felt really lucky that she had not opted for consolidation and instead got instant relief with l Chapter 7 case. She had nothing to pay on the $60,000 credit cards and she kept all of her assets. With her reduced income, consolidating $1,500 was a very, very big burden for her and her family.

She said she also felt lucky to have been tasked with providing home care to patients instead of caring for patients in hospital, as there were many cases of COVID-19 in her hospital. and she was afraid of getting sick. If anything happened to her, her grandchildren would have no one to turn to and they still wouldn’t be able to take care of themselves. Her eldest grandson at 15 worked part-time after school at a local restaurant, but was made redundant when the restaurant had to close due to almost no business due to the lockdown.

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Disclaimer: None of the above is considered legal advice and no attorney-client relationship is created between the reader, any third party, and the attorney.

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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 .

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