Bankruptcy is defined as one by which the person cannot pay his debts from the banks or financial institutions. In most cases this bankruptcy is issued by the court order. In olden situations people have the similar concept. Suppose a person borrowed some amount from other person, at this time he could not able to pay the debts then the person’s family will be brought as slavery to other person. The person could not able to pay the debts, the court or any legal declared him as bankrupt. That is except him there is no wealth or money as a part of his lives. At this situation, even how much amount the person has to give to other person, once the legal people or court declared him or her as a bankrupt then there is no need of him to repay the amount.
Based on his or her situation the bankruptcy is defined so that he is unable to pay the debt amount. Bankruptcy is not defined as a criminal act. He or She declared as a bankrupt need not be considered as a criminal. It is more or less like a white collar crime. Traditionally people called as the court has given yellow notice to him. By giving the yellow notice to a particular individual, then the bank declared him as bankrupt. Even in that situation people who borrowed the money can escape from giving back the money, irrespective of how much the amount may be. The problem with the bankruptcy person may not be allowed to get bank loans.
It will affect in his or her whole life if in certain part of time the individual has declared as a bankrupt. The individual declared as a bankrupt could not able to get any loans, any credit cards, any facilities from any of the financial institutions. All the individual’s assets have to be declared before the court or some legal institute before the individual is declared as bankrupt. The court validates all his personal documents and valuables before declared him or her as bankrupt.