What does it actaully mean when you are bankrupt?

Company/bank often borrows and/or lends money. When they owe too much and it becomes clear that they can no longer pay back to all those from whom they borrowed it, the company goes bankrupt.
Those who are supposed to get back money suffer most. They can claim, however, through legal proceedings. But, it takes time.

This just for companies or can it be for individuals?

Applies for both individuals and companies.
You may find some more useful information on Wikipedia see the first paragraph, yahoo answers, the free dictionary.

bankruptcy is a last ditch extreme though. Its not reccomended as something to do unless absolutely necessary. If an individual or corporation declares bankruptcy then all of their assets, liquid or solid are seized i.e cars, bank accounts, houses, 401k. After this happens the solid assets are sold at auction and this revenue along with the money taken get divied up among those who have filed judgement in civil court against the bankrupt individual or corporation in the order in which their judegements were filed and ruled upon. Because its a first come first serve basis on the judgements there’s usually a lot of creditors that get the shaft because there wasn’t enough assets to pay off everyone. This process wipes your credit clean but at the cost of having a giant bankruptcy mark on your credit. It can take years to build up your credit again after this happens and you’re left with nothing to your name.

I was going to launch into the meaning of being morally bankrupt (not that I have had any personal experience in that), but it appears your inquiry regards the financial type.
Oh well, see ya….Gary aka wtf

The U.S. Government should have the answer to that one.

Some states allow you to keep your home and other assets. That’s why some of the big dogs get such extravagant places – they can bury assets there. Don’t worry, Mrs. Madoff’s will not be out on the street. 15 Billion in debt or not, it’s a pretty safe bet she will live better than than 99.9% of us.
You should check the laws of your home state.

When you owe more than you have in assets, and you don’t think you can pay it back, you declare bankruptcy. You give as much of your assets as required by state law—as noted, in some states your house is protected—and your creditors divide it up to settle as much of your debts as they can. Some kinds of debt are not paid off by bankruptcy, and having a bankruptcy on your record will make things very difficult for you financially for the next seven to ten years—as you’ve shown that you have difficulty managing money responsibly, nobody will want to lend you money.

@worriedguy I’m pretty sure that if you declare personal bankruptcy you’re not allowed to keep your house. If you own a company and it is incorporated and you didn’t sign any personal guarantees on your loans and that goes bankrupt then your house and personal assets are protected.

@mistered I just checked the law for NY http://www.ilawyer.com/library/FAQ_bankruptcy.jsp
An excerpt: “Last August the new bankruptcy laws amending New York Bankruptcy Law increased the homestead exemption to $50,000 per person ($100,000 for husband and wife/ joint filers). This means that anyone who owns real estate, including a co-op or condo, if it is the filer’s primary residence, can keep up to $50,000 of that home’s equity exclusive of the balance due the mortgage bank. Thus, if the filer maintains their mortgage and tax payments, in most instances under New York Bankruptcy Law, one can file for bankruptcy and keep the home. ”