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Simple English definitions for legal terms
wage-earner's plan
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A quick definition of wage-earner's plan:
A wage-earner's plan is a type of bankruptcy plan that is available to individuals who have a regular income. It is also known as Chapter 13 bankruptcy. This plan allows the individual to reorganize their debts and make payments over a period of time, usually three to five years. It is designed to help people who are struggling with debt to get back on their feet and become financially stable again.
A more thorough explanation:
A wage-earner's plan is a type of bankruptcy filing under Chapter 13 of the bankruptcy code. It allows individuals with regular income to create a repayment plan to pay off their debts over a period of three to five years.
John is a wage-earner who has accumulated a lot of debt due to medical bills and credit card expenses. He files for Chapter 13 bankruptcy and creates a repayment plan to pay off his debts over the next five years. He will make monthly payments to a trustee who will distribute the funds to his creditors.
Another example is Sarah, who has a steady income but is struggling to keep up with her mortgage payments. She files for Chapter 13 bankruptcy and includes her mortgage payments in her repayment plan. This allows her to keep her home and catch up on missed payments over the next few years.
These examples illustrate how a wage-earner's plan can help individuals with regular income manage their debts and avoid foreclosure or repossession of assets.