What does it mean when someone declares bankruptcy?
In: 1
Very generally, bankruptcy is when someone says, *look, I don’t have the resources to satisfy all my obligations, something’s gotta give.*
In the old days, what he would often do next was to gather up all his movable wealth, secretly leave town, and start over somewhere else under an assumed name. Because you could go to prison or worse for not paying your debts. Then the people he owed money to would squabble among one another to grab up the properties he’d left behind for themselves. Some of them got rich, others got screwed. It was a huge mess.
And, now that I’ve written this much, I see other answers have done a perfectly-good job of explaining what the modern situation is, so, go read those.
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