1) the condition of having more debts (liabilities) than total assets which might
be available to pay them, even if the assets were mortgaged or sold. 2) a determination
by a bankruptcy court that a person or business cannot raise the funds to pay all
of his/her debts. The court will then "discharge" (forgive) some or all of the debts,
leaving those creditors holding the bag and not getting what is owed them. The supposedly
insolvent individual debtor, even though found to be bankrupt, is allowed certain
exemptions, which permit him/her to retain a car, business equipment, personal property
and often a home as long as he/she continues to make payments on a loan secured
by the property.
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