What is the main goal of a Chapter 13 bankruptcy?

The main goal of a Chapter 13 bankruptcy is to allow individual debtors to reorganize their debts. This form of bankruptcy provides a way for individuals to formulate a repayment plan to settle their debts over a specified period, typically three to five years. During this time, debtors can catch up on missed payments for secured debts like mortgages or car loans, while also making regular payments on unsecured debts.

Chapter 13 is particularly beneficial for individuals who wish to keep their property and avoid liquidation, which is often a feature of Chapter 7 bankruptcy. By reorganizing debt, it enables individuals to regain control of their finances while addressing their obligations in a structured manner. This legal framework aims to balance the interests of both the debtor and creditors, ensuring that creditors receive a portion of what they are owed without immediately forcing the debtor into liquidation or foreclosure.