BANKRUPTCY Meaning and
Definition
-
Bankruptcy is a legal proceeding that involves an individual, business, or organization who is unable to repay their debts to creditors. It is a state of financial insolvency where the debtor becomes legally declared bankrupt. Generally, bankruptcy occurs when a person's liabilities exceed their assets, creating an inability to meet their financial obligations.
This debt resolution process is supervised by a court and aims to provide relief to debtors by either discharging their debts entirely or reorganizing their financial affairs to enable them to repay their creditors in a structured manner. Bankruptcy ensures equitable distribution of assets among creditors and offers a fresh financial start to the debtor.
The main types of bankruptcy in the United States, for instance, are Chapter 7, also known as liquidation bankruptcy, and Chapter 13, which involves debt reorganization. In Chapter 7, the debtor's non-exempt assets are liquidated to repay creditors, while Chapter 13 allows debtors to propose a repayment plan over a designated period, usually three to five years, to settle their debts to the best of their ability.
Bankruptcy is typically initiated voluntarily by the debtor, referred to as voluntary bankruptcy, or by creditors who seek to recover their outstanding debts, known as involuntary bankruptcy.
Overall, bankruptcy is a legal process designed to provide financial relief and protection to individuals or businesses who are unable to meet their financial obligations, allowing them the opportunity to rebuild their financial stability and create a fresh start.
-
The state of being a bankrupt; failure in trade.
Etymological and pronouncing dictionary of the English language. By Stormonth, James, Phelp, P. H. Published 1874.
Top Common Misspellings for BANKRUPTCY *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for BANKRUPTCY
Etymology of BANKRUPTCY
The word bankruptcy derives from the Italian term banca rotta, which means broken bench or failed bench. This early version of bankruptcy referred to the practice of medieval moneylenders who would set up a bench or table in the marketplace to conduct their business. If a moneylender became insolvent or could not repay his debts, his bench would be physically broken to symbolize his failure and inability to continue lending money. Over time, banca rotta evolved into the French term banqueroute and later into the English word bankruptcy.
Similar spelling word for BANKRUPTCY
Infographic
Add the infographic to your website:
