Chapter 13 Bankruptcy is a reorganization bankruptcy. It means that the people who decide to file for this type of bankruptcy want to clear their debts over a period of three to five year.

Chapter 13 Bankruptcy appeals to those who have non-exempt property that they want to keep hold of and those who want to stop a foreclosure or repossession of property.

If the individual has sufficient income that is regular and can pay for their day to day living expenses and have something left over to repay their debt then they can file Chapter 13 Bankruptcy. If their finances do not fall into this category then they can not.

The person filing for bankruptcy should provide the court with schedules of assets and liabilities and then within certain time limits they have to file a repayment plan.

Once the repayment plan has been file in Chapter 13 Bankruptcy proceeding the creditors have a limited amount of time to object to the plan. If no objections are made then the debtors and their creditors are bound by the plan.

Chapter 13 Bankruptcy will allow the debtors to keep a property that he has failed to keep up mortgage payments on even if it is secured. An "automatic stay" is ordered by the court to prevent any foreclosure proceedings to continue and the debtor then has the opportunity to get caught up during the reorgnization period. However, if this does not happen then the debtor will be subject to the foreclosure at the end of the period.

If there is any secured property that has a value less than the debt in question, Chapter 13 bankruptcy allows for the return of the property to creditor. The creditor can then sell the property and pocket the proceeds.

Secured debts are to be repaid first and then when they are dealt with then non-secured debts will be repaid. In Chapter 13 Bankruptcy any unpaid portion of non-secured debts will be discharged after the period of reorganization has passed.