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“W” is for Wage Earner Bankruptcy

Posted by Peter Behrmann, Esq. On July 9th

“W” is for Wage Earner Bankruptcy (Chapter 13 Bankruptcy)

Chapter 13 Bankruptcy is often called “Wage Earner Bankruptcy” is a bankruptcy repayment plan that forces your creditors to settle their debts with you pursuant to Federal law. Chapter 13 forces creditors to settle their debt, stop interest, stop late penalties, and to get your payments on your mortgage or car current. 

Chapter 13 of the Bankruptcy Code is designed to enable individual debtors under Court protection and supervision to apply a portion of future earnings to the payment of a portion of their debts over an extended period of time. You are protected from creditors by an automatic stay while a plan of repayment is developed and carried out. I often use Wage Earner Bankruptcy for people who have fallen behind on their mortgage payment and been turned down for a mortgage modification to help them get current and save their home.  

In a Wage Earner Bankruptcy you have to file with the court a plan to repay your creditors all or part of the money that you owe them, using your future wages. The period allowed by the court to repay your debts may be three years or five years, depending upon your income and other budget factors.

After completing the payments under your plan, your debts are generally discharged just as they would be in a Chapter 7 Bankruptcy.  If you have used the Wage Earner Bankruptcy to pay on your home or car, you will come out of the bankruptcy with your mortgage being current and your car being paid off. 

Peter Behrmann is a Livonia Bankruptcy Attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy, and Foreclosure Prevention.

Photo Credit: Leo Reynolds

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