[COLUMN] Clients with bankrupt businesses using credit cards and business loans need debt relief –


The first client is 34 years old. She just got married and now has a one-year-old son. She was previously working and earning $50,000 a year. At the same time, she operated a home-based business using credit cards to finance the purchase of goods for people who had no credit. She would use her cards to buy a gift card and give it to the end buyer. The end buyer would use the gift card to purchase, for example, a television or a set of furniture. Then, the end buyer would pay it back in installments, plus some extra margin as profit for providing the service of acting as a financing intermediary to enable the end buyer to obtain the desired merchandise.

Theoretically, this economic model could work but is very risky. The risk that the customer bears of course is that the end buyers do not pay it back on time, or pay it back at all. They can just say, well, we bought this TV with a gift card, so the customer just gave them the gift card for free, to get out of their agreement to refund her so she could refund her debit cards credit.

Let’s just say the client is young and has no business experience and trusts people too much. In fact, she didn’t get the end buyers herself. She had an intermediary person, an “up-line” who recruited the end buyers, and I believe that this “up-line” also collected payments from the end buyers and handed over the collections to her.

Long story short, the end buyers defaulted on their payment obligations and as a result, the customer is left with the bag of credit card debt. She now owes, would you believe, $300,000 in credit cards! That’s a lot of credit card debt.

For anyone, let alone someone in their 30s, owing a ton of credit cards is like being put in a jail cell with the key thrown away. Imagine the minimum payment required on $300,000 worth of credit cards. That’s at least $10,000 per month in minimum payments each month just to keep the $300,000 up to date each month! Without a doubt, the customer needs a fresh start in life without those credit cards harassing her every day for payment.

We expect questions from the Chapter 7 administrator as well as possibly the US administrator about how she racked up so much credit card debt. But as long as she’s telling the truth about what happened, that she used those credit cards, the law is in favor of a discharge to free her of those debts so she can have a fresh start in life. life without accumulating debt. This is why Chapter 7 is called the “fresh start” law. Everyone wants to be productive again. How can she be productive again if she has to give her credit card masters $10,000 a month just because her business failed? It is a cruel and unjust punishment. It’s like daily torture for the rest of his life.

The second client is 69 and widowed. Would you believe she bought six expensive cars costing at least $100,000 each! It’s $100,000 for each car. She owes a total of $800,000 in car loans! These are expensive cars, large Mercedes Benz and Lexus, SUVs and large sedans. They are all purchased with car loans, not leased. His business model was to rent these high-end cars to people who wanted to use them temporarily, perhaps to show some people that they had an expensive car. These people would pay his rent to use the cars; then she would pay the rent to pay off the car loans and make her profit. This plan is also flawed because the tenant can simply decide not to pay the rent or just run away with the car. The renter is authorized to use the car but is not responsible for paying for the car. It’s a good deal for the tenant and a very bad deal for a client who should know better at her age.

In addition to these auto loans, she secured a $50,000 business line of credit to fund her car rental business. Of course, when the rents don’t come in on time, she’ll need money to pay the auto loans on time, which is why she needs a business line of credit.

However, the client says she was actually defrauded by two people who set up the whole business operation, including setting up a business to do car rentals. , buy the cars, get the business line of credit and get the tenants.

Again, this senior needs a fresh start in life without the $800,000 auto loans and the $50,000 business line of credit. She needs the “fresh start” provided by bankruptcy law. Even the elderly need that fresh start without racking up debt. How can she retire in peace with $800,000 in car loans and a $50,000 line of credit when she’s not a billionaire? She is on Social Security and has a decent six-figure retirement portfolio that gives her enough income to enjoy her life, but certainly not to support the financial burden of paying $800,000 in car loans and a line of credit. business credit of $50,000.

As long as she tells the truth about how she got into this mess, bankruptcy law will give her a chance to start fresh without the $800,000 car loans and the business line of credit. She can keep her retirement portfolio and her social security.

All these renters are now driving all over the country and getting all kinds of toll tickets from different states, and guess who gets the bill for all the traffic violations for six expensive cars? Not Donald Trump for sure.

The third client is 55 years old. She bought a restaurant for $80,000 about 5 years ago. Unfortunately, the restaurant loses money every year. Surprise! As soon as she disbursed her purchase payment for the restaurant, it began to lose money. And now an employee wants to sue her for a work-related injury. If she leaves the restaurant, the landlord will sue her to collect 3 more years of unpaid rent at $50,000 per year, for a total of $150,000. Fortunately, she signed the lease as an officer of the company owning the restaurant, and did not sign as an individual tenant, and did not sign as an individual guarantor of the lease, otherwise she would also be personally responsible for the $150,000. unpaid lease.

So, the company that owns the restaurant must file Chapter 7 to get out of the lease and workers’ claim.

Of course, with Trump’s trade wars, many importers here will soon need filing for bankruptcy. Either that or the yuan is devalued by 25% to compensate for customs duties. A long and protracted trade war could occur and plunge the whole world into chaos and recession. Nobody wins. Nowadays, it is really a sad reality.

Bankruptcy is the only realistic and effective solution for accumulated debts. Chapter 7 is used to completely erase unsecured debt. Chapters 13 and 11 are used to reorganize and/or consolidate financial affairs, or to save a house from foreclosure, or to resuscitate a business. Walt Disney did Chapter 7 twice before his Disney empire became a hit. Yes, it’s true. Without Chapter 7, there would be no Disneyland today on earth, and what would we all be without the happiest place in the world to go? In my life, I’ve taken my family to Disneyland 23 times!

If you need debt relief, schedule an appointment to see me. I will analyze your case personally.

“We wait for the Lord with hope; He is our help and our shield. Psalm 33:20

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Disclaimer: None of the above is considered legal advice to 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 over five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave, Mailstop 58, Building A-1 Suite 1125, Alhambra, CA 91803 or 20274 Carrey Road, Walnut, CA 91789 .

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