When your debts seem to be straining your budget and leaving you afraid for your financial future, it may be time to file for bankruptcy. Before heading to court in Massachusetts, you will need to decide which type of bankruptcy to file. One of your options is Chapter 13. You may have heard this called a wage earners plan because of how it works.

The U.S. Courts explains Chapter 13 is a repayment plan. You will work with the court and your creditors to develop a plan to repay your debts based on your income and ability to pay. You may lose some assets as the court may take them to repay your debts. However, you will also usually have the option of saving secure debts, such as a car or your home, because your plan allows you to continue paying them.

Unlike Chapter 7, Chapter 13 does not require you to pass a means test, but you do need to have income and be able to commit to a repayment plan. You may make payments for up to five years on your plan. When you reach the end date of the plan, any unpaid debts become discharged and you no longer have to pay them. Ideally, you will repay all your debts in full, but if this does not happen, they will not remain after the court discharges your case.

Do note that if your plan includes a secured debt, such as your home, you must pay at least the value of your home before the discharge. This information is for education and is not legal advice.