Bankruptcy: meaning, definitions and examples

Used when an individual or company cannot repay their debts and seeks legal relief. It often involves a formal legal process in court.

• The company filed for bankruptcy after accumulating overwhelming debts.
• He faced bankruptcy after losing his job and being unable to pay his loans.

Used when someone or a company cannot pay their debts as they come due. It indicates a financial state rather than a formal process.

• After years of poor financial management, the company was finally deemed insolvent.
• Insolvency often leads to bankruptcy if no measures are taken to address the financial issues.

Used when a company's assets are sold off to pay its debts, usually as a last step when closing the company completely. It often involves a formal legal process.

• The liquidation of the store's assets was necessary to pay off its creditors.
• After declaring insolvency, they proceeded to liquidation to settle their outstanding debts.

Typically refers to failing to meet the legal obligations of a loan, such as missing a payment or not adhering to the terms. It is mainly used in a financial and legal context.

• Defaulting on a loan can severely damage your credit score.
• The borrower defaulted on the mortgage, leading to foreclosure.

This term is often used in legal and financial contexts to describe the formal process by which a person or business declares they are unable to repay their debts.

• After months of trying to save the company, they finally declared bankruptcy.
• Filing for bankruptcy can help you manage overwhelming debt.

This expression describes the condition of being unable to meet financial obligations without necessarily referring to the formal legal process. It can be used more informally.

• The town is in a bankrupt state after years of poor management.
• They found themselves in a bankrupt state after their investments failed.

Often used in a technical or formal financial context, this term describes a situation where an individual or company cannot pay their debts as they come due, but doesn't always imply formal legal proceedings.

• The company is facing insolvency due to declining sales.
• Insolvency can sometimes be avoided with proper financial planning.

This word has a broader, often dramatic and negative connotation, and can describe financial collapse as well as any severe damage in other aspects.

• His gambling habits led him to financial ruin.
• The economic policies brought about the ruin of the local industry.