A person who is in a state of bankruptcy.
Historically, a person who was unable to pay debts as they came due was called a bankrupt. But today, there is a no-man's land between paying one's debts as they come due and the status of bankruptcy: insolvency.
Not all insolvent persons become bankrupt. Some are able to shield themselves from collection atacks made by creditors by using other forms of credit consolidation and payment; short of having to become bankrupts by a judicial and public declaration of their bankruptcy.
Bankruptcy is a form of statutory protection given to insolvent persons, usually by court order, on the insolvent's application or on the request of a creditor. Once such an order is given, the insolvent person is thereafter a bankrupt, and may then avail himself of the protection from creditors as provided in the relevant bankruptcy statute, as well as have a portion of the debts extinguished.
The distinction was perhaps best described by Justice Gray of the British Columbia Supreme Court in a 1878 decision as follows:
"The mere fact of a man being a debtor, or having his goods taken by a forced sale, does not necessarily make him an insolvent or bankrupt; nay, his absolute inability to pay his debts does not make him legally (a) ... bankrupt. Those may be circumstances to be considered in determining whether he is one or not. But to make the law applicable to him as such, he must have been so declared by proceedings taken under the statutes regulating ... bankruptcy.
"It is quite compatible with a man being possessed of ample means, yet, for some reason of his own, permitting his goods to be taken by a forced seizure and sale.... Though unusual, such a course would not be ... illegal."
It is typical for jurisdictions to require a certain level of debt before entertaining an application for the debt erasure, partially or entirely, that a declaration of bankruptcy usually entails.
REFERENCES:
Johnson v Gray 1 British Columbia Reports, page 93; at page 95-96 (1878).