(law) (a) The status of an individual or legal entity who does not have the financial resources needed to pay debts as they come due. (b) The legal proceedings for declaring bankruptcy and discharging or restructuring debts. Laws related to these proceedings vary greatly among different countries. In the United States, bankruptcy proceedings are brought before bankruptcy courts. In some countries, a bankruptcy is dealt with through administrative agencies and a bankrupt person must first attempt to make a composition with creditors. See composition with creditors.