Bankruptcy
Etymology
Traditionally traced to Italian "banca rotta" (broken bench) — banca "bench or money table" + rotta "broken". Medieval moneychangers did business at benches, and a failed dealer’s bench was said to be broken, ending his trade. Whether the benches were literally smashed is debated, but the image of the broken counter gave the word its shape.
noun · /BANK-rupt-see/
A legal process for people or businesses that cannot pay their debts, which discharges or reorganizes what they owe.
What it names
The formal, court-supervised reset for insurmountable debt — a legal off-ramp, not simply the state of being broke.
Example
After the medical bills mounted past any hope of repayment, they filed for bankruptcy to start over.
Related idea
Distinguish insolvency, the underlying financial condition of being unable to pay debts as they fall due; bankruptcy is the specific legal proceeding you enter to deal with insolvency.