Which bankruptcy chapter allows individuals to propose a repayment plan?

The correct choice is notable because Chapter 13 bankruptcy is specifically designed for individuals who have a regular income and wish to propose a repayment plan to pay off their debts over a specified period, typically three to five years. This form of bankruptcy allows debtors to keep their property while reorganizing their debt obligations, providing a structured approach to managing their finances and making arranged payments to creditors.

In Chapter 13, individuals can propose a plan that outlines how they will manage their debts, addressing secured and unsecured obligations while receiving court approval for this repayment strategy. The focus is on reestablishing financial stability without liquidating assets, making it distinct from other types of bankruptcy.

Other bankruptcy chapters serve different purposes: Chapter 7 involves liquidating assets to pay off debts without offering a repayment plan; Chapter 11 is primarily geared towards businesses for reorganization; and Chapter 12 is specifically tailored for family farmers and fishermen. Understanding these distinctions is essential for recognizing how various bankruptcy options serve the needs of individuals and businesses.