If you make a decent wage but not enough to meet debt payments, then chapter 13 bankruptcy might be more suitable. You can avoid liquidation by setting up a repayment plan suitable to your financial situation. You will be able to meet all your essential needs, and what is left over will go towards your debt. This plan will also protect co-signers who will not suffer the repercussions of delinquent loans.
Under chapter 13, a trustee is set up who will distribute each of your payments among your different creditors. Your debts will be split by order of priority which is adjusted as you progress along your plan.
It is not the end of your repayment plan if your income changes. Your recurring payments can be reduced for nonpriority unsecured debt, such as medical, credit card, and personal debt. You also might qualify for a hardship discharge based on the reason for your income change. If neither of these are possible, you could convert to chapter 7 and discharge your debt. However, your assets would be subject to liquidation.
When in chapter 13, obtaining additional credit or a mortgage will be nearly impossible. It also remains on your credit report for up to 10 years and can take up to 5 years to fully complete the plan. For these reasons, one might just pursue chapter 7 and be rid of their debt. However, if you want to protect your assets from being liquidated, a chapter 13 bankruptcy might be your best option.