Chapter 13 Bankruptcy is also known as a reorganization, because it allows for the repayment of debt over a three to five year period.  Payments are based upon your disposable income, which is the income left over after you pay your necessary monthly expenses.

Chapter 13 can be a powerful tool in many circumstances.  For example, a person may file Chapter 13 on the eve of a foreclosure and save their house by making small catch-up payments.  In addition, it can protect assets that may not be protected under Chapter 7.

Unlike Chapter 7, everyone is eligible to file Chapter 13.  Because you are repaying part of your debt, one advantage of filing this type of bankruptcy is that it appears on your credit report for a shorter period of time than a Chapter 7.