Bankruptcy

The state of being bankrupt or insolvent; inability to meet obligations. A debtor in financial difficulties is privileged to make all reasonable efforts to extricate himself and to this end he may execute a mortgage or give any other lien to one furnishing him money at the time and this mortgage or lien will be sustained though the debtor should be declared a bankrupt within four months thereafter. The secured creditor must first ex-. haust his security and then he can come in only for a pro-rata share upon the amount left unpaid. A payment of money by an insolvent within four months of his actual bankruptcy creates a preference like the delivery of any other property by the debtor to his creditor. The creditor thus preferred if he knew at the time of payment or had reasonable cause to believe that it was paid to him by preference can be compelled to return the money to the trustee in bankruptcy. If, however, he did not know or have reasonable ground for believing that he was being made a preferred creditor he cannot be compelled to return the money. But in such ' a case he cannot collect any dividend upon any remainder of his ‘debt unle he does return what he has received. He may retain what he has and waive all claim to the balance or he may return what he has received and be included among the other creditors for a dividend upon the whole of his debt. When an insolvent has been discharged in bankruptcy any real estate or personal property, to which he may take title thereafter is free from claims existing against him prior to the bankruptcy proceedings whether those claims had been reduced to judgments or not. The intent of the law is that a debtor shall surrender whatever property he has to be distributed among his creditors and that he shall thereby be freed from further liability for those particular debts.: A law of any state which conflicts with the national bankruptcy law is to that extent invalid. Bank’s bill or banker’s bill. A bill of exchange (draft) i ued by a bank or banker. 61