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Simple English definitions for legal terms
bankrupt
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A quick definition of bankrupt:
Bankrupt: When someone owes more money than they can pay back, they are called bankrupt. This means they are unable to meet their financial obligations and are insolvent. A bankrupt person may have to give up their property to be divided among their creditors. In the past, bankruptcy laws used the term "bankrupt" to describe someone who was unable to pay their debts, but now the term "debtor" is more commonly used.
A more thorough explanation:
Bankrupt is an adjective used to describe a person or company that owes more money than they can pay back. It means they are insolvent and cannot meet their financial obligations.
Bankrupt can also be used as a verb, meaning to declare someone or something bankrupt. Additionally, it can be a noun referring to a person who is unable to pay their debts.
Example 1: John's business went bankrupt because he couldn't pay his bills.
Example 2: The company was declared bankrupt by the court after failing to pay its creditors.
Example 3: The bankruptcy laws were changed in 1979, and now the term debtor is used instead of bankrupt in the Bankruptcy Code.
Example 4: Mary was a bankrupt and had to forfeit all her property to be divided among her creditors.
These examples illustrate how the term bankrupt is used to describe a person or company that is unable to pay their debts. It can have serious consequences, such as losing property or being declared insolvent by a court.