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Chapter 13 Wage Earner Plans: one of the best bankruptcy alternatives, but only for residents of the USA
   

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Chapter 13 Wage Earner Plan - Should I File One?

 
 

Note to readers: Chapter 13 Wage Earner Plans are one of the best bankruptcy alternatives, but they are a legal process only available to residents of the United States. Residents of Canada should consider a Consumer Proposal.

What is a Chapter 13 Wage Earner Plan?

A Chapter 13 plan is a negotiated settlement between you and the people you owe money to (your creditors). It's a deal that you make with your creditors as an alternative to bankruptcy. It is also known as a Chapter 13 bankruptcy.

 

A Chapter 13 plan involves the reorganization of a debtor's financial affairs. If successful, you will have a payment plan that will protect you from foreclosure, garnishment, and most other court actions.

To qualify for protection under Chapter 13, you must have an income that is higher than your reasonable living expenses.

Obviously if you don't have extra income, you won't have the money to make repayments to your creditors.

Depending on your income and other circumstances, your Chapter 13 plan may require repayment for the full amount of the debt, or you may only be required to pay off only a small percentage of your debts.

Before filing a Chapter 13 plan you must meet with a credit counselor at some point during the six months prior to filing your Wage Earner Plan, and you must attend money management classes (at your own expense) before a final order will be issued by the bankruptcy court.

What are the advantages of a Chapter 13 Wage Earner Plan?

By having a Chapter 13 Wage Earner Plan accepted, you avoid a Chapter 7 bankruptcy. A Chapter 13 plan is one of the best bankruptcy alternatives available to Americans. You have a payment plan that you can live with, and your plan will often only require you to repay a fraction of your total debts.

One disadvantage of a Chapter 13 plan are that it will appear on your credit report for up to ten years. This will make it more difficult for you to borrow in the future. Of course you also have a monthly payment to make, even if your income falls during the plan.

A Chapter 13 Wage Earner Plan is not the right option for everyone, but if you have a job and the ability to repay your debts, a Chapter 13 plan is one of the best bankruptcy alternatives.

 


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