Bankruptcy

Definition

• The financial status of an individual or firm that has been legally judged either to have debts that exceed assets or to be unable to pay bills. The individual or firm can declare bankruptcy voluntarily or be pressed by creditors to do so. The debtor's remaining property and assets are then administered for the creditors or distributed among them.

Synonyms
overdrawn, nonpayment, default, exhaustion, loss

Acronyms
BK

Related Terms and Acronyms

• Asset Case — Definition,
  • A bankruptcy proceeding where there are non-exempt assets that might be accessible to pay creditor's claims.
• Bankruptcy Trustee — Definition,
  • A private individual or corporation appointed to undertake bankruptcy proceedings for a individual or corporation.
• Business Bankruptcy — Definition,
  • A bankruptcy case in which the debtor is a business or an individual involved in business and the debts are for business purposes.
• Cash Collateral — Definition,
  • The proceeds of cash collected from the sale of liquid assets while in bankruptcy.
• Collection — Definition,
  • The efforts used to bring an overdue mortgage, or other debt current, and the filing of necessary notices to proceed with foreclosure when necessary.
• Consumer Bankruptcy — Definition,
  • A bankruptcy case filed to reduce or eliminate debts that are primarily consumer debts.
• Debtor — Definition,
  • A person who has filed a petition for relief under the bankruptcy laws.
  • Anyone who owes money to a creditor.
• Fiduciary — Definition,
  • An individual, company, or association that manages assets for another party. Fiduciaries include executors of wills and estates, trustees, receivers in bankruptcy, and those responsible for managing the finances of a minor.
• Fiduciary Duty — Definition,
  • A requirement that someone in a position of trust, such as a banker, real-estate agent, or title agent, must act in good faith and trust on behalf of a client.
• Forbearance — Definition,
  • Delaying foreclosure, usually because the borrower has arranged to pay the amount in arrears.
• Foreclosure — Definition,
  • The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
• Forfeiture — Definition,
  • Loss of property because of violation of law or contract.
• Fresh Start — Definition,
  • The characterization of a debtor's status after bankruptcy. i.e., free of most debts.
• Impaired Insurer — Definition,
  • An insurance company that is financially insolvent or illiquid and in risk of being unable to pay insurance claims.
• Liquidation — Definition,
  • The practice of selling or redistributing some or all of a business's assets in order to repay debts or pay investors if the business becomes insolvent or is sold in full or in part.
  • To convert into cash.
  • To settle the outstanding debts by selling property.
• Non-dischargeable Debt — Definition,
  • Debt that cannot be eliminated in bankruptcy such as Federal taxes.
• Probate Sale — Definition,
  • Sale of property after the death of the owner, supervised by a court, with proceeds divided among creditors and heirs.
• Receivership — Definition,
  • A form of bankruptcy where a person is appointed to take control of a company and is responsible for recouping unpaid debts.
• Refinance — Definition,
  • To arrange a new loan for an increased amount or better terms whereby the old loan is paid off from the proceeds of the new loan.
• Repayment Plan — Definition,
  • Modification of an existing loan after the borrower has been delinquent. Often used when the borrower misses payments but the lender does not foreclose.
• Repossession — Definition,
  • The taking back of property after a borrower has stopped making payments.
• Secured Credit Card — Definition,
  • A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.
• Solvency — Definition,
  • To be able to meet one's financial liabilities in the short or long term.
• Tax Sale — Definition,
  • A government sale of property to recover unpaid taxes.