Which type of bankruptcy involves the reorganization of personal finances?

The answer is Chapter 13 bankruptcy, which fundamentally involves the reorganization of personal finances. This type of bankruptcy is specifically designed for individuals with a regular income who are looking to repay all or a portion of their debts over time, usually under a three to five-year repayment plan.

In Chapter 13, debtors propose a repayment plan to make installments to creditors, allowing them to keep their property while catching up on missed payments. This process provides a structured way to address financial difficulties without liquidating assets as in Chapter 7 bankruptcy, where a trustee is appointed to sell the debtor's non-exempt assets.

Chapter 11 bankruptcy, on the other hand, is typically utilized by businesses that require reorganization but can also be available to individuals when they have higher levels of debt, while Chapter 12 is aimed at family farmers and fishermen. Neither of these is as focused on the personal financial reorganization aspect as Chapter 13.