Act of Bankruptcy


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Act of Bankruptcy

An action by a debtor that can be a basis for creditors to file a bankruptcy petition against the debtor. Examples of such actions are concealing assets, defrauding creditors, favoring one creditor over another, or admitting in written a willingness to be adjudged bankrupt.

Act of Bankruptcy

An involuntary admission of bankruptcy by a debtor. In general, going into default and consistently missing payments may be considered acts of bankruptcy. Before 1978 in the United States, an act of bankruptcy involved the transfer of assets to another party with the intent to defraud creditors, but this is no longer the case. Upon committing an act of bankruptcy, creditors have the ability to petition to force the debtor into legal bankruptcy.
References in periodicals archive ?
The act of bankruptcy won't go away, but we can make it a little less painful and equitable for the parties involved.
The act of bankruptcy itself generally is an indication of at least partial worthlessness, and many times will establish worthlessness if it is obvious before the settlement date that there are no assets to be distributed to the creditor.
"They're going to hide behind this cowardly act of bankruptcy and try to make it sound like we're being greedy."