When a person is unable to repay his or her debts, a common method for dealing with this problem is to go bankrupt or declare bankruptcy. Companies and corporations can also go bankrupt. This is a legal matter that involves lawyers, a judge, and the creditors to whom money will eventually be paid. It’s bad to go bankrupt. Bankruptcy causes problems for people who want to take out loans or get credit in the future.

Use the word "bankrupt" as an adjective:

  • Bill and Jan went bankrupt after their business failed. (Notice the verb "go" is often used with "bankrupt.")
  • The store is closed because the company that owns it is bankrupt.
  • If they go bankrupt, they’ll probably have to sell their car.

Use the word "bankruptcy" as a noun:

  • John declared bankruptcy because he couldn’t pay his bills.
  • It takes about seven years to repair your credit record following a bankruptcy.
  • Sue and Al decided that bankruptcy was the only solution to their problems.
  • Bankruptcy is something you should try to avoid at all costs.*

(*avoid at all costs: try as hard as possible not to do it because the situation might be very bad.)

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September 21, 2014