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The Bankruptcy Code offers several options for types of bankruptcy that may be filed, which are known as chapters. Chapter 13 bankruptcy is also known as wage-earner bankruptcy.

As this video explains, Chapter 13 is designed for people who have a steady income. You will set up a court-approved repayment plan. This provides for a portion of your future income to be paid to a trustee who, in turn, will make payments on your debts over a long period of time. The average repayment plan is three to five years. Compared to Chapter 7 bankruptcy, Chapter 13 offers the advantage of not being forced to liquidate or lose your assets to pay your creditors.