Bankrupted
Origin
modification of Middle French & Old Italian; Middle French banqueroute bankruptcy, from Old Italian bancarotta, from banca bank + rotta broken, from Latin rupta, feminine of ruptus, past participle of rumpere to break
Definitions
- 1a : a person who has done any of the acts that by law entitle creditors to have his or her estate administered for their benefit
- b : a person judicially declared subject to having his or her estate administered under the bankrupt laws for the benefit of creditors
- c : a person who becomes insolvent
- 2: a person who is completely lacking in a particular desirable quality or attribute <a moral bankrupt>
Description
Bankruptcy is simply the inability of an individual to secure any more money from a bank. It is a device that informs banks that an individual or organization will not be able to pay monies owed if any more money is lent. Once declared 'bankrupt', the bankrupt cannot operate a BANK account or borrow monies from a bank until discharged as a bankrupt. The device came into existence after it became clear that something had to be done about the circumstance of borrowing from one bank to 'pay-off' the loans of another where there was no monies or assets available to satisfy the debts in the first place. One obvious consequence is a failure to pay creditors. Creditors file a bankruptcy petition against an individual or organization debtor ("involuntary bankruptcy") for several reasons. It could be an effort to recoup a portion of what they are owed or initiate a restructuring or sometimes clear their own books of bad debt and cease doing business with an entity that clearly is in no position to be doing business on credit terms. Because of the legal requirement to trade whilst 'solvent' , it is now often the case that bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the insolvent individual or organization). An involuntary bankruptcy petition may not be filed against an individual consumer debtor who is not engaged in business.[1]
