Definition of Bankruptcy. Bankruptcy is a legal status or process in which individuals, businesses, or organizations declare themselves unable to repay their outstanding debts to creditors.

Bankruptcy: Definition & When To File. By Nicholas Rossolillo – Updated Apr 17, 2025 at 12:22AM Key Points. Bankruptcy is a legal process to ...

Learn what bankruptcy is, the different types, and how it affects your finances. Find out the steps involved in filing for Chapter 11, Chapter 13, and Chapter 7 bankruptcy.

Chapter 7 bankruptcy is the simplest form of bankruptcy, also known as liquidation. The bankrupt party must sell off all its assets, then a court decides which creditors get paid and in what order.

Chapter 13 bankruptcies can help individuals reorganize their debt and start fresh. People who file Chapter 13 bankruptcy must have a steady income and a total debt under $2,750,000.