what is a wage earner s plan 
a wage earner s plan known more formally as chapter 13 bankruptcy enables individuals with a regular income to restructure their obligations to repay their debt over time 1 in a wage earner s plan the debtor does not seek to earn general forgiveness of their outstanding debts rather the debtor offers up a repayment plan that utilizes fixed installment payments effectively consolidating debts into one monthly amount the debtor makes payments to an appointed impartial trustee who then forwards them to the creditor for a specified period usually three to five years 1 understanding wage earner s planschapter 13 bankruptcy was formerly called a wage earner s plan because relief under it was only available to individuals who earned a regular wage subsequent statute changes expanded it to include any individual including the self employed and those operating an unincorporated business 1 any individual is eligible for chapter 13 bankruptcy as long as their unsecured debts are less than 394 725 and secured debts are less than 1 184 200 and they have received credit counseling from an approved credit counseling agency either in an individual or group briefing within 180 days of filing a corporation or partnership is not eligible for chapter 13 bankruptcy 1 chapter 13 bankruptcy vs chapter 7 bankruptcyperson who is seriously in debt may file for either chapter 13 bankruptcy or chapter 7 bankruptcy chapter 13 bankruptcy allows for the reorganization of debt while chapter 7 bankruptcy involves outright liquidation with a chapter 13 bankruptcy debtors are allowed to keep their property when a debtor files for a chapter 7 bankruptcy they may be able to keep home equity or a car but equity shares second homes and or vacation properties will be forfeit to pay back creditors 2 1 one of the biggest advantages of chapter 13 is that it offers individuals an opportunity to save their homes from foreclosure by filing for chapter 13 bankruptcy individuals can halt any foreclosure proceedings and submit a plan to pay off any delinquent mortgage payments over a period of three to five years chapter 7 is the most common form of bankruptcy because it allows individuals to erase their existing debt and start over however oftentimes with a chapter 7 bankruptcy the individual filing surrenders their home in the process 2 a chapter 13 bankruptcy also allows individuals to reschedule secured debts excluding a mortgage on their primary residence and extend them over the life of the plan which may lower their payments in addition a chapter 13 bankruptcy has a special provision that may protect co signers under this provision plan payments are made to an appointed impartial trustee who distributes them to creditors so the debtor has no direct contact with creditors 1 