bank·rupt·cy /'baŋ-ˌkrəp-sē/ n pl -cies
1: the quality or state of a bankrupt
filed for bankruptcy
2: the administration of an insolvent debtor's property by the court for the benefit of the debtor's creditors
the debt was discharged in bankruptcy
bankruptcy proceedings see also adequate protection; bankruptcy code in the important laws section compare insolvency, receivership
◇ Bankruptcy protects the debtor from debt collection by creditors. A debtor may file for bankruptcy, which is called “voluntary bankruptcy,” or a creditor may petition the court to declare the debtor bankrupt, which is called “involuntary bankruptcy.” Involuntary bankruptcy is allowed only under chapter 7 or chapter 11 of the U.S. Bankruptcy Code. There are four types of relief available to individuals or corporations under the Bankruptcy Code: liquidation (chapter 7), reorganization (chapter 11), debt adjustment for a family farmer (chapter 12), and debt adjustment for an individual with a regular income (chapter 13). Municipalities may file for bankruptcy under chapter 9. Generally, not all debts are repaid in a bankruptcy. The court determines which debts are to be repaid according to their priority, and the debtor is typically granted a discharge from unpaid debts that are dischargeable under the Bankruptcy Code.

Merriam-Webster’s Dictionary of Law. . 1996.

I noun defaulting, destituteness, destitution, failure, financial disaster, financial failure, financial ruin, impecuniosity, inability to pay, indigence, insolvency, involuntary liquidation, loss, loss of fortune, pauperism, penury, privation, ruin, ruination associated concepts: adverse claims, arrangement for the benefit of creditors, bankruptcy act, bankruptcy assets, bankruptcy court, bankruptcy estate, bankruptcy proceedings, composition in bankruptcy, composition proceedings, discharge in bankruptcy, foreclosure, fraudulent conveyance, fraudulent transfers, involuntary bankruptcy, preferences, priorities, provable debts, receivers in bankruptcy, referees in bankruptcy, reorganization proceedings, sale of assets, schedules, trustee in bankruptcy, valuation, void preference, voidable transfer II index default, privation

Burton's Legal Thesaurus. . 2006

An order made under the Insolvency Act 1986 against an individual debtor (not a limited company) which signifies that he is unable to pay his debts and deprives him of his property which is distributed among his creditors. A bankrupt cannot trade or act as a company director.

Easyform Glossary of Law Terms. — UK law terms.

A process in which a court declares a person or business insolvent and orders the debtor’s assets to be sold to pay off creditors, at which point the debtor is discharged from any further obligation and may begin anew.

The Essential Law Dictionary. — Sphinx Publishing, An imprint of Sourcebooks, Inc. . 2008.

the process taken to have a person declared bankrupt and to have his property administered for the benefit of his creditors. A bankruptcy consists of an act of bankruptcy followed by an adjudication. The property of the bankrupt becomes vested in a trustee in bankruptcy whose function is to identify and gather in assets belonging to the bankrupt; these are subsequently distributed among the creditors towards satisfaction of their claims, with the debtor being released from future liability in respect of his debts upon giving all the assistance in his power towards the realisation and distribution of his estate and fulfilling any other conditions required by the law for his discharge. The distribution is so many pennies for each pound of debt. A partnership may become bankrupt without any of the partners becoming bankrupt; conversely, individual partners may become bankrupt while the firm remains solvent. However, since individual partners are ultimately liable without any limitation of liability for the debts of the firm, concurrent bankruptcies of the firm and the individual partners are common. A bankruptcy notice may be issued against a partnership in the firm's name; if it is served on one partner only and at an address that is not the business premises of the firm, a receiving order may be made against the partner alone. Similar provisions apply in Scotland, but there are significant differences. See Bankruptcy (Scotland) Act 1985 (as amended). See insolvency, liquidation, receiver.

Collins dictionary of law. . 2001.

A federal legal process for debtors seeking to eliminate or repay their debts. There are two types of bankruptcies for consumers: Chapter 7, which allows debtors to wipe out many debts in exchange for giving up nonexempt property to be sold to repay creditors, and Chapter 13, which allows debtors to keep all of their property and repay all or a portion of their debts over three to five years. Businesses can file for Chapter 7 or Chapter 11 bankruptcy. Chapter 11 lets companies reorganize their debt load to stay in business.
Category: Bankruptcy, Foreclosure & Debt → Bankruptcy

Nolo’s Plain-English Law Dictionary. . 2009.

In England, this term relates to individual insolvency only. However, the term is used in overseas jurisdictions to cover corporate insolvency as well as individual insolvency.
Related links
Insolvency Act 2000

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

n. A federal judicial procedure by which most debts owed by a person or entity are extinguished or reduced or the payment of which are delayed.
@ Chapter 7 bankruptcy
A bankruptcy proceeding whereby most of the debtor's assets are collected and sold, the proceeds are distributed among the creditors, and the debtor's liabilities are discharged. Also called straight bankruptcy.
@ Chapter 11 bankruptcy
@ Chapter 12 bankruptcy
A bankruptcy proceeding whereby a farmer with a regular income who is insolvent can keep and continue operating his farm while arranging and carrying out, under court supervision, a repayment plan with his creditors.
@ Chapter 13 bankruptcy
A bankruptcy proceeding whereby a person with a regular income is allowed to propose a plan to reduce her obligations or extend the period to pay those obligations and allow her future earnings to be collected by a trustee and paid to the debtor's unsecured creditors. Also called rehabilitation.
@ involuntary bankruptcy
A bankruptcy proceeding initiated by a creditor to legally declare a debtor to be bankrupt and to impound all of the debtor's non-exempt property, distribute it or its proceeds to the creditors, and extinguish the debtor's liability.
@ straight bankruptcy
A bankruptcy proceeding whereby most of the debtor's assets are collected and sold, the proceeds are distributed among the creditors, and the debtor's liabilities are discharged. Also called Chapter 7 bankruptcy.
@ voluntary bankruptcy
A bankruptcy proceeding voluntarily initiated by a debtor who files a petition with the bankruptcy court to be legally declared a bankrupt and, during the proceeding, surrenders his property in order to discharge his debts.

Webster's New World Law Dictionary. . 2000.

A federally authorized procedure by which a debtor—an individual, corporation, or municipality—is relieved of total liability for its debts by making court-approved arrangements for their partial repayment.

Dictionary from West's Encyclopedia of American Law. 2005.

A federally authorized procedure by which a debtor—an individual, corporation, or municipality—is relieved of total liability for its debts by making court-approved arrangements for their partial repayment.
II Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may be released from or "discharged" from their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings. The person with the debts is called the debtor and the people or companies to whom the debtor owes money are called creditors.

Short Dictionary of (mostly American) Legal Terms and Abbreviations.

   a federal system of statutes and courts which permits persons and businesses which are insolvent (debtors) or (in some cases) face potential insolvency, to place his/her/its financial affairs under the control of the bankruptcy court. The procedure is that when the debtor's debts exceed his/her/its assets or ability to pay, the debtor can file a petition with the bankruptcy court for voluntary bankruptcy or the debtor's unpaid creditors can file an "involuntary" petition to force the debtor into bankruptcy, although voluntary bankruptcy is far more common. The most common petition is under Chapter 7, in which a trustee is appointed by the court, the current assets are counted up by the trustee (with many of them exempt from bankruptcy), who pays debts to the extent possible with priority for taxes, then secured debts (mortgages or some judgments), and finally unsecured debts. Then the court adjudicates (officially declares) the debtor a bankrupt and discharges the unpayable debts, to the loss of the creditors. Exempt from sale to pay debts are a portion of the value of a home (equal to a homestead), secured notes that can be kept current, an automobile, tools of the trade, furniture, and some other items. The concept is to give someone a fresh start, but it has often led to careless, profligate business operations and casual running up bills with those giving credit being badly hurt by bankruptcies. Not dischargeable in bankruptcy are alimony and child support, taxes, and fraudulent transactions. Filing a bankruptcy petition automatically suspends all existing legal actions (even on the eve of trial or judgment, or on the day of foreclosure on real property), and is often used to forestall foreclosure or imposition of judgment. After 45 or more days a creditor with a debt secured by real or personal property can petition the court to have the "automatic stay" of legal rights removed and a foreclosure to proceed. Upon adjudication (officially declared) as a bankrupt a party cannot file for bankruptcy again for seven years. Chapter 11 bankruptcy allows a business to reorganize and refinance to be able to prevent final insolvency. Often there is no trustee, but a "debtor in possession," and considerable time to present a plan of reorganization. Sometimes this works, but often it is just a bottomless pit of more debt and delay. The final plan often requires creditors to take only a small percentage of the debts due (what is owed them) or to take payment over a long period of time. Chapter 13 is similar to Chapter 11, but is for individuals to work out payment schedules, which is more likely to be worthwhile. Bankruptcy law has become a specialty due to complex regulation as well as administration. Initial fees must be paid up front by the petitioner or the creditors, but much of the assets may be eaten up by the court-approved fees of the trustees and attorneys (although often the attorneys find no assets available for payment). There are some limited state bankruptcy laws to aid debtors, but they are seldom employed, except to create creditors' committees, which can be developed voluntarily.

Law dictionary. . 2013.

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