Legally insolvent, also known as BANKRUPT, is a term used to describe an individual or business that is unable to pay their debts. Bankruptcy is a legal process that can be used to help individuals and businesses manage their debt. It involves the court-appointed trustee taking control of the debtor's assets and distributing them among creditors. Legally insolvent individuals and businesses are no longer able to borrow money or make payments on existing debts.