Bankruptcy Resources

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What is a Wage Earner’s Plan?

If you’re struggling financially and you’re not sure where to turn, you may benefit from talking to a Maryland bankruptcy lawyer who can help you get back on track.

What is a Wage Earner’s Plan?

A wage earner’s plan (a common name for Chapter 13 bankruptcy) is a form of debt relief for people who have a regular income and wish to repay all (or part of) their debts. Because a wage earner’s plan is actually a bankruptcy, you’ll need to work through the U.S. bankruptcy courts; the two courts that handle these cases are located in Greenbelt and Baltimore.

This form of debt relief is a little like a consolidation loan. You’ll submit a repayment plan to the court, and you’ll make monthly payments to the trustee assigned to your case; the trustee will then distribute payments to your creditors.

What Are the Advantages of a Wage Earner’s Plan?

A wage earner’s plan can offer you some advantages over a Chapter 7 bankruptcy. Unlike Chapter 7, a wage earner’s plan doesn’t require you to liquidate your assets—and it gives you an opportunity to save your home from foreclosure. This type of debt relief also lets you reschedule secured debts and extend them over the life of your repayment plan, and it may even protect co-signers on your loans.

The Automatic Stay on a Wage Earner’s Plan

Once you file for Chapter 13 bankruptcy and begin the discharge process, the courts issue what’s called an automatic stay. That means your creditors can no longer contact you about your debts—no more phone calls, letters, or emails. Instead, your creditors have to work through the court system.

Are You Eligible to File a Wage Earner’s Plan?

Because every case is different, it’s best to talk to a bankruptcy lawyer in MD to find out whether you’re eligible to file a wage earner’s plan (and whether it’s the best choice for your situation).

The criteria for a wage earner’s plan are the same in Maryland as they are in the rest of the country. You must:

  • Have less than a certain amount in unsecured debt
  • Have less than a certain amount in secured debt

You can’t file if, within the last 180 days, you’ve had a bankruptcy petition dismissed because you failed to appear before the court, comply with court orders, or chose to abandon your case after creditors worked through the court system to recover property on which they held liens.

You also have to have credit counseling from an approved credit counseling agency within the 180 days prior to filing, and you’ll need to show proof that you’ve completed the counseling. (There are a few exceptions, which you can discuss with your attorney.)

What You Need to File a Wage Earner’s Plan

You and your bankruptcy lawyer will discuss all the documents you need to file a wage earner’s plan in Maryland, which include:

  • A list of all your creditors, and how much you owe them
  • The source, amount, and frequency of your income
  • A list of all your property
  • A detailed list of your monthly living expenses (including rent or mortgage payments, how much you spend on food, utilities, and medicines, and other related expenses)

If you’re married, you’ll have to provide the same information for your spouse—even if your spouse isn’t filing for bankruptcy.

You and your lawyer will put together a repayment plan, which you’ll submit to the trustee. After you attend a confirmation hearing where the court finalizes your repayment plan, you’ll begin making payments to the courts.

Do You Need to Talk to a Maryland Lawyer About a Wage Earner’s Plan?

If you need to talk to an attorney about a wage earner’s plan, whether you’re in DC, NoVA, or Maryland, we can help.

Call us at 301-933-2595 for a free consultation with a bankruptcy attorney. We’ll evaluate your situation and start developing a strategy right away.

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