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Being bankrupt means you're unable to pay off your debts, either because you owe too much money or don't have enough income or assets to cover what you owe. It’s a legal status, and when you declare bankruptcy, a court takes control of your financial affairs. This often involves selling off your assets to repay creditors. Bankruptcy gives you a fresh financial start by wiping out certain debts, but it also affects your credit score and financial reputation for years. While it can relieve overwhelming debt, bankruptcy is a serious step and can limit your ability to borrow money in the future.