The Indian Business Owner TIBO Magazine - Volume 001 | Page 27

reorganize that $20,000.00 and slowly pay it back
for up to 60 months, interest free. Therefore, rather
than having to write a check for $20,000.00 (which
most people that are in the process of bouncing
back generally do not have) to stop your home from
foreclosing, you could enter into a Chapter 13 and
pay that $20,000.00 at $333.33 per month for 60
months and the bank could not do anything about it.
In addition to saving homes from being foreclosed,
a great deal of small business owners also took out
second mortgages to finance their business ventures.
At the time they took out these second mortgages,
they assumed paying it back would be easy once their
business was up and running. However, 6 years later,
they now have a failing or failed business, a home that
is severely underwater, and piles of unsecured credit
card debt that they cannot pay. In these instances, if
you are able to prove to the Court that the fair market
value of your home is less than what is owed on your
first mortgage, Chapter 13 has the power to “strip”
off that second mortgage and discharge your personal
obligation to repay that loan and your unsecured
credit card debt.

Chapter 13 is a very powerful tool in the bankruptcy
code that allows you to save your assets (i.e. home,
car, business, etc.) while at the same time reorganizing
your debts into a 3-5 year repayment plan. As long
as your Chapter 13 Plan abides by the intricacies of
Title 11 of the United States Code and your Court’s
local rules, the bank that is attempting to foreclose on
your property is barred from doing so. The reason
they are barred from foreclosing on your property is
due to the extremely powerful Automatic Stay. The
Automatic Stay comes into existence upon the filing
of your Chapter 13 and is an injunction on the bank
from pursuing a foreclosure action. If they violate this
federally imposed injunction, the Court could likely
issue sanctions.
Looking back at the above example, the main goal of
that client is to save his/her home without having to
come up with $20,000.00 up-front. Minus a Chapter
13, the options are definitely limited. However, by
filing for Chapter 13 relief, you would be allowe d to
25 |TIBO Magazine - Fall 2016

Above are just two ways that Chapter 13 has become
an integral part in allowing hard working Americans
to bounce back from a challenging financial time in
their lives. Do not allow your legacy to be determined
based on short-term financial drawbacks; compel
people to see that the success you achieve after falling
down is what defines you.

Pauldeep Bains, Esq.
Bains Legal, PC

Pauldeep Bains is the managing partner at Bains Legal,
PC, a boutique law firm located in Sacramento, CA. Mr.
Bains’ practice specializes in both Chapter 7 and Chapter 13
bankruptcy relief for individuals as well as small business
owners.
www.TIBOmagazine.com