A Chapter 13 Wage Earner Plan is one of the best alternatives to bankruptcy for resident of the United States.It is similar to a consumer proposal which can be filed by people who live in Canada.
How Does a Chapter 13 Wage Earner Plan Work?
When you file a Chapter 13 wage earner plan, you are making a deal with your creditors to pay back all or some of what you owe them under a payment plan that you can afford.It is meant for people who earn regular wages but just can’t quite make the payments on their debts each month.The Chapter 13 bankruptcy can last up to five years.
Once you file a Chapter 13 petition with the court, an impartial trustee will be appointed to administer the case.They will evaluate your situation and help develop your plan and present it to your creditors who will then decide whether they will accept it or not.Typically, if you have taken the time with the trustee to be well-prepared, there will not be a problem with your proposed plan.Now, instead of making multiple monthly payments on your many debts, you will make just one to the trustee either monthly or bi-weekly, who will then distribute it among your creditors as has been agreed upon.
Who is Eligible for a Chapter 13 Wage Earner Plan?
Any individual person (not a corporation or partnership) is eligible for Chapter 13 relief as long as the amount of their debts does not go above $307, 675 for unsecured debts (those with no collateral) and $922, 975 for secured debt and they are earning wages that cover more than their reasonable living expenses.The person must also have received credit counselling from an approved agency within the 180 days prior to filing and had not been dismissed from another type of bankruptcy filing in this time period.
Why is it a Chapter 13 Wage Earner Plan a good idea?
The best thing about a Chapter 13 is that it helps avoid filing for Chapter 7 bankruptcy.By extending the length of time you will take to pay off your debts, your monthly payments will be smaller making it easier for you to get out of debt.Chapter 13 also offers the convenience of consolidation because you only make one monthly payment to the trustee who will deal with all your creditors for you.Once you have filed the petition, the creditors are no longer allowed to take any action against you in order to collect their payments.
The process of filing a Chapter 13 Wage Earner Plan is complicated and the rules change frequently.For example, the maximum amount of debt allowed to qualify is adjusted to reflect changes in the consumer price index.You should seek help from a professional to make sure you have all the information you need about a Chapter 13 before you file the petition with the court.
Posted by Editor Bankruptcy Alternatives @ 6:40 pm