Finance Matters

Bankrupcy is the legally defined inability or seriously reduced ability of a company, organization or individual to pay their debts.

Bankruptcy is effectively the statutory procedure under federal law by which a person, known as the "debtor" under goes a judicially-supervised liquidation or reorganization.

This process is for the benefit of those who are owed money - "creditors" - where the debtor is usually relieved of most of his debts through discharge. The creditors are given a proportion of the debtor's liquidated assets.

The word bankruptcy is often misspelled as bankruptsy, bankrupsy, or bankrupcy, among other versions, but all these words mean the same thing.