Which type of bankruptcy allows for individuals to restructure their debts?

The focus of Chapter 13 bankruptcy is indeed on restructuring debts, making it a suitable option for individuals seeking a more manageable way to handle their financial obligations. Under Chapter 13, individuals can propose a repayment plan to make installments to creditors over a three to five-year period. This restructuring allows debtors to retain their assets, such as their home or car, while still making payments toward their debts according to a tailored plan that reflects their income and expenses.

Individuals typically choose Chapter 13 because it provides a clear pathway to regaining control of their finances without the need to liquidate assets, which is a significant feature of Chapter 7 bankruptcy. Additionally, Chapter 11 bankruptcy, primarily designed for businesses, focuses on reorganization rather than direct management of personal debt. Chapter 12 bankruptcy, while it allows for restructuring, is specifically tailored for family farmers and fishermen, making it less applicable for the general population. Thus, Chapter 13 stands out as the appropriate choice for individuals looking to restructure rather than completely discharge their debts.