A legal status in which a person who cannot pay his or her debts obtains protection from further action by most unsecured creditors.
The person may lodge his or her own application with AFSA to become bankrupt, which if accepted, is referred to as a debtor's petition bankruptcy.
A creditor can also seek to make a person bankrupt through an application to the court. If the court agrees, it is referred to as a creditor’s petition bankruptcy or sequestration order bankruptcy.
When a person becomes bankrupt, his or her property is administered by the trustee to allow for the fair distribution of property among creditors.