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Inability to pay to the creditors may be called "bankruptcy". But, here, there is a distinction. One will have to consider whether the inability to repay is a temporary phase, or that the Borrower is completely failing and without any means or property. In case of temporary failing, it may be called a "default" due to circumstances beyond his control, which may not be willful default.

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Another View: Inability to pay one's creditors is known as being IN DEFAULT.

It is only after the defaulter petitions the court for protection from their creditors, AND the court rules in his favor, is it known as bankruptcy.

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Q: Inability to pay creditors called
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