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Wage Earner Plan (Chapter 13 Bankruptcy)

What is 'Wage Earner Plan (Chapter 13 Bankruptcy)'

Also known as a Chapter 13 bankruptcy, this enables individuals with regular income to develop a plan to repay all or part of their debts for a period of three to five years. The repayment period depends on the debtor's monthly income as compared to the applicable state median. During this repayment period, the law forbids creditors from starting or continuing collection efforts.


Chapter 13 was formerly called a wage earner's plan because relief under it was only available to individuals who earned a regular wage. Subsequent statute changes expanded it to include any individual, including the self-employed and those operating an unincorporated business.




Explaining 'Wage Earner Plan (Chapter 13 Bankruptcy)'

A Chapter 13 bankruptcy offers individuals a number of advantages over Chapter 7, the most important being that it offers them an opportunity to save their homes from foreclosure. Chapter 13 also allows individuals to reschedule secured debts - except for a mortgage on their primary residence - and extend them over the life of the plan, which may lower their payments. In addition, Chapter 13 has a special provision that may protect co-signers, and also acts like a consolidation plan under which plan payments are made to a trustee who distributes them to creditors.


Any individual is eligible for Chapter 13 relief as long as his or her unsecured debts are less than $360,475, and secured debts are less than $1,081,400 (as of 2010), and he or she has received credit counseling within 180 days before filing. A corporation or partnership is not eligible for Chapter 13 bankruptcy.





Further Reading


The Wage Earner Plan--A Superior Alternative to Straight Bankruptcy
heinonline.org [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

An empirical study of debtor education in bankruptcy: Impact on chapter 13 completion not shownAn empirical study of debtor education in bankruptcy: Impact on chapter 13 completion not shown
heinonline.org [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

Debt relief and debtor outcomes: Measuring the effects of consumer bankruptcy protectionDebt relief and debtor outcomes: Measuring the effects of consumer bankruptcy protection
www.aeaweb.org [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

An econometric analysis of interstate differences in nonbusiness bankruptcy and chapter thirteen ratesAn econometric analysis of interstate differences in nonbusiness bankruptcy and chapter thirteen rates
onlinelibrary.wiley.com [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

The Boom in Going Bust: The Growing Scandal in Consumer BankruptcyThe Boom in Going Bust: The Growing Scandal in Consumer Bankruptcy
www.jstor.org [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

Personal failures and the bankruptcy reform act of 1978Personal failures and the bankruptcy reform act of 1978
www.journals.uchicago.edu [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

Chapter 13 and the Family FarmChapter 13 and the Family Farm
heinonline.org [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …

Predictors of 1997 Chapter 13 bankruptcy completion and dismissal rates in UtahPredictors of 1997 Chapter 13 bankruptcy completion and dismissal rates in Utah
digitalcommons.usu.edu [PDF]
… the most severe disadvantage of the wage earner plan for the debtor is that often after sacrificing to pay his debts from future earnings, and sustaining … The wage earner plan has the advantage to the creditor of offering greater recoupment of his claims against the debtor …


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