Bankruptcy Definition: Bankruptcy is a legal process where a person or party is unable to pay their existing accumulated debt or can no longer afford to meet their financial obligations. During this process, a petition is filed by the debtor or borrower, which is followed by having all the assets evaluated and measured to repay as much of the outstanding debt as possible.
In some cases, bankruptcy may not include real estate or specific assets from the evaluation, though most often, where there is a high amount of debt, all assets and cash are included in the evaluation and liquidation.
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