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.