Home > West's Encyclopedia of American Law > Wage Earner's Plan

A form of BANKRUPTCY under a former federal law whereby an individual retained her property and paid off a debt over a period of time, as determined by a court and subject to supervision by the court.

Under Chapter Thirteen of the federal bankruptcy statutes (11 U.S.C.A. § 1301 et seq.), individuals who are unable to repay their debts when due may develop a plan for full or partial repayment. This procedure was formerly called a wage earner's plan because it was available only to persons who earned a regular wage. Changes in the statute now permit the owners of unincorporated small businesses to participate in this procedure, which is now known as either a Chapter Thirteen proceeding or a rehabilitation. A rehabilitation process enables the debtor to regain good credit and financial standing.

To qualify, an individual must have unsecured...