Bankruptcy is the state where an institution or an individual is not able to pay back the debts that are liable. If an institution or an individual reaches to the state of bankruptcy then all the assets owned by them are sold and all the debts are paid back. Over spending and not keeping a [...]
Bankruptcy is the state where an institution or an individual is not able to pay back the debts that are liable. If an institution or an individual reaches to the state of bankruptcy then all the assets owned by them are sold and all the debts are paid back. Over spending and not keeping a track of the spending leads to the bankruptcy for an individual and on the other hand frauds, regular losses leads to the bankruptcy for an institution or a firm. Due to the recent recession, many of the individuals, banks and IT companies have gone bankrupt. The reason for the bankruptcy has been the housing bubble in US, where the financial institutes provided loans to the people having a bad credit rating at high interest rates for buying houses or land. When the number of defaulters increased, the financial institutes started feeling the heat and due to the lack of funds, they reached to the state of bankruptcy. People and organizations all around the world did lend their money to the financial institutes also lost their money due to the defaulters which made the credit crisis reach all over the world.
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