

Act of Bankruptcy

Definition - What does Act of Bankruptcy mean?

An act of bankruptcy is an action that could justify bankruptcy proceedings against an individual. If a debtor commits an act of bankruptcy, then his or her creditors may attempt to have the courts declare that person bankrupt. Creditors would do this so that they could legally claim the assets of the debtor in order to satisfy the debt.

Justipedia explains Act of Bankruptcy

Acts of bankruptcy can include defaulting on payments, fleeing the state or district, avoiding arrest through concealment, concealing goods or chattels to prevent seizure, etc. Basically, any action that indicates an intention to not repay a debt, or to escape being forced to do so, can reflect an act of bankruptcy. People who go into debts are legally obligated to repay them if the contract was legally binding. It is for this reason that debts are legally enforceable and that assets can be seized if the debts are not repaid.

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