Definition of Bankrupt

In the real estate context, ‘bankrupt’ refers to a person or an entity that has been legally declared insolvent due to the inability to pay off their debts, including mortgages. This often involves the liquidation of assets, like real estate properties, to repay creditors.

Also see bankruptcy.

Related Real Estate Terminology

1. Foreclosure: A legal process where a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as the collateral for the loan.
2. Short Sale: A situation in which a lender agrees to accept a mortgage payoff amount less than what is owed to allow a sale of the property by a financially distressed owner.
3. Mortgage: A loan used to purchase or maintain a real estate property, where the property itself serves as the borrower’s collateral.
4. Equity: The difference between the market value of a property and the amount the owner owes on any mortgages.
5. Insolvency: The state of being unable to pay the money owed, on time, to creditors.
6. Liquidation: The process of converting assets into cash to pay off debts.

Reference

For further information, you may refer to:

1. U.S. Bankruptcy Code
2. Consumer Financial Protection Bureau