You’ll sometimes hear Chapter 13 bankruptcy described as a “wage earner plan” or “wage earner’s plan.” Here’s why Chapter 13 bankruptcy gets that nickname and what it might mean for your specific situation.
Why Chapter 13 Bankruptcy Relates to “Wage Earning”
The two types of personal bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is designed to help you clear your debts with one big swoop. It’s a great way to get a fresh start, and a lot of people choose it if they can qualify.
However, Chapter 13 bankruptcy is also an extremely powerful tool. It was designed right here in the South, where I work, to help people who earn wages pay off their debts. At the time it was first developed, “wages” referred to income from a place of employment. It was (and often still is) the bankruptcy option for the many people who have a job but can’t make ends meet.
Over the years, this definition changed to include any income, like disability payments, fixed income retirement plans, and more. As a result, some people qualify for Chapter 13 even when they don’t qualify for Chapter 7.
Depending on your individual situation, you might prefer Chapter 13. It has the power to stop foreclosure and repossession and can be the best long-term financial choice. Over time, people who file Chapter 13 can often improve their credit score significantly and find lasting financial stability.
How Chapter 13 Bankruptcy Works
If you’re considering bankruptcy at all, first and foremost, speak with a lawyer. Don’t go it alone. The right attorney will help you sort out your options and make sure you qualify for the type of bankruptcy you want.
If together you decide Chapter 13 is right for you, your attorney will set up a debt reorganization plan. Basically, this plan gives you and the courts a framework for how you’ll pay some of the debts you owe, based on your financial ability to do so. It never promises payments you can’t afford.
This plan protects you and your assets, so it stops foreclosure and repossession, wage garnishment, etc. And because it’s guaranteed by the courts, your creditors can’t come after you again claiming you owe them more money.
Find a Bankruptcy Lawyer in Memphis
At our Memphis firm, we’ve helped thousands of people get out of debt using Chapter 13. We can help you decide which bankruptcy chapter is right for you and why. Then, we’ll do the work to get you out of debt and into a better financial state. It’s what we love and what we do best.
To get started, contact us today at 901-327-2100 or use the form below. We look forward to helping you!