What You Need to Know About Bankruptcy (Part 3): Chapter 13
Chapter 13 Bankruptcy is commonly referred to as the “Wage Earner Plan.” This is because it is mostly designed for wage earners and small businesses that are not incorporated.
As we discussed in Part 1, Chapter 13 Bankruptcy is commonly referred to as the “Wage Earner Plan.” This is because it is mostly designed for wage earners and small businesses that are not incorporated, such as sole proprietorships and partnerships. Many subcontractors fall into this category of bankruptcy. The main goal of this chapter is to deal with the readjustment of an individual’s debts.
The Bankruptcy Court will appoint a Chapter 13 trustee who will work with the debtor and oversee his or her finances and budget. Any amount of disposable income is paid directly to the trustee, who takes a commission, and then distributes the rest of the funds to the debtor’s creditors.