What type of proceeding is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is indeed referred to as a wage-earner's proceeding. This type of bankruptcy is designed for individuals with a regular income who are struggling to pay their debts, allowing them to repay all or part of their obligations over a specified period of time, usually three to five years.

In this process, the debtor proposes a repayment plan to make installments to creditors, which is tailored to their income level and financial circumstances. This is distinct from liquidation bankruptcies where assets are sold off to pay off creditors, as in Chapter 7. Chapter 13 allows debtors to keep their property and assets while making payments based on their income, making it particularly useful for individuals who wish to avoid foreclosure on their homes or who want to catch up on missed payments. The focus on future earnings and an established repayment timeline differentiates it from other types of bankruptcy proceedings, such as business reorganizations or mandatory asset distributions.