A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.

If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During this time the law forbids creditors from starting or continuing collection efforts.

In Texas, Chapter 13 bankruptcy, often referred to as a wage earner's plan, allows individuals with a steady income to create a repayment strategy for some or all of their debts. Debtors submit a repayment plan to pay back creditors in installments over a period of three to five years. The duration of the plan is typically three years if the debtor's monthly income is below the state median. However, it can be extended to five years if the court finds justifiable cause. Conversely, if the debtor's income exceeds the state median, the repayment plan is generally set for five years. Legally, the repayment period cannot exceed five years. Throughout the duration of the Chapter 13 plan, creditors are legally prohibited from initiating or continuing any debt collection actions against the debtor.