What is Bankruptcy?

Bankruptcy is a legally declared stated imposed on someone who cannot pay the people who loaned money to them.

Bankruptcy is complex and varies from country to country. Simply put, a bank (or other creditor) can impose bankruptcy on you when you legally fail to repay them. This severely limits your ability to borrow, purchase, even travel for a set periods of time (usually many years). It also carries with it many methods for the bank / lender to reclaim all or part of their money from you;

Avoid Bankruptcy at All Costs

This situation is to be avoided by all means as in most cases you will be severely restricted in your lifestyle for the rest of your life as a permanent record is noted against you making it difficult to conduct your personal affairs. Make sure you do not get into this situation by managing your finances properly.

Further Reading

Bankruptcy (wikipedia)