The bankruptcy process is riddled with jargon and official terms that confuse many people. When seeking bankruptcy protection, getting to know these terms becomes important to the outcome of your case. If you are considering filing for Chapter 13 bankruptcy, you may be faced with several terms that are not part of the Chapter 7 process. One example is the wage earners plan.
Debt Repayment In Chapter 13
Since the aim of Chapter 13 is to reorganize debts and repay creditors through the assistance of the court, debtors must set up an official plan of action for repayment. A wage earners plan is the repayment plan that is developed in the Chapter 13 process. Typically, the plan is developed by reviewing debts, income and monthly expenses. Most people find the repayment plan suitable for their budget, which allows them to repay their debts over three to five years.
The plan is presented to the court for final approval. In some cases, the court may make changes to the plan or deny the plan until appropriate modifications have taken place. This typically only happens if the court feels you can pay more than is outlined in the plan. One of the best things about the wage earners plan is that creditors cannot collect on the debt outside of the approved plan. Further, creditors will not be able to seize or liquidate assets as long as you are making your payments according to the plan.