What is Bankruptcy?

Legal Definition
Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Bankruptcy is not the only legal status that an insolvent person or other entity may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, including the United Kingdom, bankruptcy is limited to individuals, and other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings. In France, the cognate French word banqueroute is used solely for cases of fraudulent bankruptcy, whereas the term faillite (cognate of "failure") is used for bankruptcy in accordance with the law.
-- Wikipedia
Legal Definition
Bankruptcy law provides for the reduction or elimination of certain debts, and can provide a timeline for the repayment of non-dischargeable debts over time. It also permits individuals and organizations to repay secured debts --typically debts with real estate and vehicles pledged as collateral -- often on more favorable terms to the borrower.

Bankruptcy law is federal statutory law contained in Title 11 of the United States Code. Congress passed the Bankruptcy Code under its Constitutional grant of authority to "establish... uniform laws on the subject of Bankruptcy throughout the United States." See U.S. Constitution Article I, Section 8. States may not regulate bankruptcy; but, they may pass laws that govern other aspects of the debtor-creditor relationship. See Debtor-Creditor. A number of sections of Title 11 incorporate the debtor-creditor law of the individual states.

Bankruptcy proceedings are supervised by and litigated in the United States Bankruptcy Courts. These courts are a part of the District Courts of The United States. The United States Trustees were established by Congress to handle many of the supervisory and administrative duties of bankruptcy proceedings. Proceedings in bankruptcy courts are governed by the Bankruptcy Rules which were promulgated by the Supreme Court under the authority of Congress.
Bankruptcy comes in five varieties:
Legal Definition
The state or condition of a bankrupt.

2. Bankrupt laws are an encroacbment upon the common law. The first in England was the stat. 34 and 35 H. VIII., c. 4, although the word bankrupt appears only in the title, not in the body of the act. The stat. 13 Eliz. c. 7, is the first that defines the term bankrupt, and discriminates bankruptcy from mere insolvency. Out of a great number of bankrupt laws passed from time to time, the most considerable are the statutes 13 Eliz. c. 7; 1 James I., c. 19 21 James I., c. 19 5 Geo. II., c. 30. A careful consideration of these statutes is sufficient to give am adequate idea of the system of bankruptcy in England. See Burgess on Insolvency, 202-230.

3. The Constitution of the United States, art. 1, s. 8, authorizes congress "to establish an uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States." With the exception of a short interval during which bankrupt laws existed in this country, this power lay dormant till the passage of the act of 1841, since repealed.

4. Any one of the states may pass a bankrupt law, but no state bankrupt or insolvent law can be permitted to impair the obligation of contracts; nor can the several states pass laws conflicting with an act of congress on this subject 4 Wheat. and the bankrupt laws of a state cannot affect the rights of citizens of another state. 12 Wheat. It. 213. Vide 3 Story on the Const. §1100 to 1110 2 Kent, Com. 321 Serg. on Const. Law, 322 Rawle on the Const. c. 9 6 Pet. R. 348 Bouv. Inst. Index, h. t. Vide Bankrupt.
-- Bouviers Law Dictionary
Legal Definition
1. The state .or condition of one who is a bankrupt; amenability to the bankrupt laws; the condition of one who has committed an act of bankruptcy, and is liable to be proceeded against by his creditors therefor, or of one whose circumstances are such that he is entitled, on his volimtary application, to take the banefit of the bankrupt laws. The term ls used in a looser sense as synonymous with "insolvency,"— inabliity to pay one's debts; the stopping and breaking up of business because the trader is broken down, insolvent, ruined. Phipps v. Harding, 70 Fed. 468, 17 C. O. A. 203, 30 Li R. A. 613; Arnold v. Maynard, 2 Story, 354, Fed. Cas. No. 561; Bernhardt v. Curtis, 109 La. 171, 33 South. 125, 94 Am. St Rep. 445.

2. The term denotes the proceedings taken under the bankrupt law, aguinst a person (or firm or company) to have him adjudged a bankrupt, and to have his estate administered for the benefit of the creditors, and divided among them.

3. That branch of jurisprudent, or system of law and practice, which is concerned with the definition and ascertainment of acts of bankruptcy and the administration of bankrupts' estates for the benefit of their creditors and the absolution and restitution of bankrupts. As to the distinction between bankruptcy and insolvency, it may be said that insolvent laws operate at the instance of an imprisoned debtor; bankrupt laws, at the instance of a creditor. But the line or partition between bankrupt and Insolvent laws is not so distinctly marked as to define what belongs exclusively to the one and not to the other class of laws. Sfurges v. Crown-inshield, 4 Wheat. 122, 4 In Ed. 529. Insolvency means a simple inability to pay. as debts should become payable, whereby the debtor's business would be broken up; bankruptcy means the particular legal status, to be ascertained and declared by a judicial decree. In re Black, 2 Ben. 196, Fed. Cas. No. 1,457. Classification. Bankruptcy (in the sense of proceedings taken under the bankruptcy law) is either voluntary or involuntary; the former where the proceeding is initiated by the debtor's own petition to be adjudged a bsnkrupt and have the banefit of the law (In re Murray [D. C.] 96 Fed. 600; Metsker v. Bonebrake, 108 U. S. 66, 2 Sup. Ct. 351, 27 In Ed. 654), the latter where he is forced into bankruptcy on the petition of a sufficient number of his creditors.
See also
-- Black's Law Dictionary
Legal Definition
The condition of one adjudged a bankrupt.
-- Ballentine's Law Dictionary