What is bankruptcy?
Bankruptcy is a legal proceeding under federal law that allows a debtor who is having serious financial difficulties to obtain financial
relief. Bankruptcy allows debtors to either eliminate their debts or repay them under the protection of the bankruptcy court. A debt
may be either secured or unsecured. Secured debts are those that have collateral attached to them such as your house or car. For
example, if you obtain a mortgage on your house, your house is considered collateral for your loan/debt. In the event your loan is not paid
back, the lender may foreclose or repossess your property (the collateral) to recover the owed money.
Examples of unsecured debts are credit cards, medical bills or anything else that is not attached/secured by collateral.
Bankruptcy cases are administered by the federal bankruptcy court system. 


What are the different types of bankruptcy?
Bankruptcy consists of several types of chapters that contain different mechanisms for addressing financial problems.
A Chapter 7 bankruptcy, also known as a liquidation, allows a debtor to eliminate or discharge (forgive) all or some of
his or her  unsecured debts. Anyone, even a corporation, can file a Chapter 7 bankruptcy case. A Chapter 7 case will also allow
a debtor to surrender secured property back to the creditor if the debtor can no longer afford to keep it. On the other hand,
if a debtor can afford to keep his or her property and that property does not have excessive equity, then it can be
retained by reaffirming the debt with the creditor. Once a secured debt is reaffirmed, payments on secured debt will
continue pursuant to the terms of the contract.
Upon the filing of a Chapter 7 bankruptcy, a trustee is appointed to preside over the case and determine whether
there are any nonexempt assets to liquidate for the benefit of creditors. Thus, if a trustee determines that your
asset (for example your car or home) has equity and you cannot exempt this equity under Georgia law, then the
trustee can sell your asset and pay your unsecured creditors with the proceeds from this sale. 
For debtors with higher incomes that do not qualify for filing a Chapter 7 bankruptcy, a Chapter 13 bankruptcy
can be filed. A Chapter 13 bankruptcy, known as a "Wage Earners Plan," allows a debtor to protect valuable assets
and also assist a debtor who has fallen behind on his or her mortgage or car payment to catch up on those payments
through a reorganization plan. In this plan, a debtor proposes to pay back his or her creditors over a period of time.
The plan is presented to a bankruptcy judge for approval and upon approval is administered by a Chapter 13 trustee.
The Chapter 13 trustee collects and distributes funds paid by the debtor to all of his or her creditors based on
the plan approved by the Bankruptcy Court. Payments on long-term debt (for example, a mortgage on a home being
retained) must continue at their contract rate after the filing, in addition to the Chapter 13 plan payment.
This type of bankruptcy can only be filed by individuals having the income to fund a case.
 from farming or fishing.


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