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Bankruptcy means:
a state of insolvency of an individual or an organization, that is, an inability to pay debts. Two kinds of bankruptcy under U.S. law are: (1) Chapter 7, or involuntary, when one or more creditors petition to have a debtor judged insolvent by a court, and (2) Chapter 11, or voluntary, when the debtor brings the petition. In both cases the objective is an orderly and equitable settlement of obligations.

See also other Tax Terms and Definitions in U.S.A.

Chapter 7 of the 1978 Bankruptcy Act; Chapter 11 of the 1978 Bankruptcy Act.

Description and Definition of Bankruptcy

A person or company is considered bankrupt if they are unable to pay their bills and debts in a timely fashion. Under Chapter 11 (for businesses) and Chapter 13 (for wage earners) the bankrupt tries to reorganize his/its debts.

Bankruptcy Issue

You may find information about Bankruptcy in this Tax Platform of the American Encyclopedia of Law.


See Also

Further Reading

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