Chapter 13 bankruptcy is sometimes referred to as the Wage Earners bankruptcy. Just like with Chapter 7 cases, there are certain requirements to be eligible to file a Chapter 13. The most important eligibility requirement is that you must have regular income to file a Chapter 13. Regular income can include wages, social security, disability, unemployment compensation, court ordered alimony, rental income, or regular contributions from third parties. It is important to note that only individuals and married couples, not businesses, can file for Chapter 13.
The primary purpose of a Chapter 13 bankruptcy is to create a repayment plan for your debts. It allows you to retain all of your assets while repaying all or a portion of what you owe to your creditors over a 3 to 5 year period. In many cases, you will only be repaying your unsecured creditors 10% of the debt. In a Chapter 13 case, you file a Plan that provides the payment terms for your creditors.
The decision to choose a Chapter 13 filing depends on the specific goals you are trying to achieve.