Chapter 13 Debt Consolidation Bankruptcy

Chapter 13 Bankruptcy a/k/a "Wage Earner Bankruptcy" is about forcing creditors to settle their debts with you pursuant to Federal law. Creditors hate it. Chapter 13 forces creditors to settle their debt, stop interest, and stop late penalties. This is Federal debt consolidation.

Typically, most people seek bankruptcy protection due to illness, loss of work, divorce, or just plain bad planning.  Feel no guilt. Feel no shame. Since birth, you have been subjected to an army of professional sales people who have surrounded you with seductive messages urging you to buy. The credit card companies have spent billions urging you to accept their easy credit so that you can live beyond your means. Then they get you tied down with no way out. 

Recognize that there is more to life than a perfect credit rating (if you are reading this page, the A+ credit rating is probably already gone). What is important is family, friends, and neighbors. Nor should you forget that the American Economy from the stock market to retail is largely based upon consumer debt. Why should you be any different in this era of multibillion dollar bailouts for poorly managed companies. Fortunately, since biblical times, societies have discouraged debtors from "falling on their swords" when overwhelmed with debt. 

Chapter 13 Wage Earner Bankruptcy

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. The debtor is protected from creditors by an automatic stay while a plan of repayment is developed and carried out. It is similar to a Chapter 11 Business Reorganization. In fact, Chapter 13 is sometimes called "Consumer Debt Adjustment."

Chapter 13 was intended to give the wage earner a reasonable opportunity to arrange installment payments out of future income so that creditors would receive more money than they otherwise would receive in liquidation.