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Definition - Noun
1  : the quality or state of a bankrupt <filed for ~>
2  : the administration of an insolvent debtor's property by the court for the benefit of the debtor's creditors <the debt was discharged in ~> <~ proceedings>
see also adequate protection Bankruptcy Code in the Important Laws section
compare insolvency receivership
Bankruptcy protects the debtor from debt collection by creditors. A debtor may file for bankruptcy, which is called «voluntary bankruptcy," or a creditor may petition the court to declare the debtor bankrupt, which is called «involuntary bankruptcy." Involuntary bankruptcy is allowed only under chapter 7 or chapter 11 of the U.S. Bankruptcy Code. There are four types of relief available to individuals or corporations under the Bankruptcy Code: liquidation (chapter 7), reorganization (chapter 11), debt adjustment for a family farmer (chapter 12), and debt adjustment for an individual with a regular income (chapter 13). Municipalities may file for bankruptcy under chapter 9. Generally, not all debts are repaid in a bankruptcy. The court determines which debts are to be repaid according to their priority, and the debtor is typically granted a discharge from unpaid debts that are dischargeable under the Bankruptcy Code.
Pronunciation'ba[nj]-"kr&p-sE

	Pronunciation Key
	\&\ as a and u in a b ut \[^&]\ as e in kitt en \&r\ as ur and er in f urther \a\ as a inash \A\ as a in ace \?\ as o in m op \au\ as ou in ou t \ch\ as ch in ch in \e\ as e in bet \E\ as ea in easy \g\ as g in go \i\ as i in hit \I\ as i in ice \j\ as j in job \[ng]\ as ng in sing \O\ as o in go \o\ as aw in law \oi\ as oy in boy \th\ as th in thin \[th_]\ as thin the \?\ as oo in loot \u\ as oo in foot \y\ as y in yet \zh\ as si in vision

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Based on Merriam-Webster's Dictionary of Law ©2001. Merriam-Webster, Incorporated Published under license with Merriam-Webster, Incorporated. http://www.m-w.com