What is insolvency? That's what I got asked yesterday...New Years Day...it makes me sad but I also found it encouraging that a friend of mine wants to finally put her financial house in order. She wanted me to define insolvent because she was trying to figure out if she's insolvent or not.
You may be wondering if you are insolvent. I'm thinking that if you have to ask you probably are but according to dictionary.com, the definition of insolvency is the following:
the condition of being insolvent; bankruptcy.
Well that's not very helpful, is it? Okay, let's go to the definition of insolvent then. The definition of insolvent according to dictionary.com is:
1. not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.
2. pertaining to bankrupt persons or bankruptcy.
3. a person who is insolvent.
Still not very clear, is it? Okay, well if you are wondering if you are insolvent or not for the purposes of filing bankruptcy I say that you are insolvent if you are unable to pay your debts. If your debts exceed your income and your assets then you are insolvent.
Problem is, a lot of people don't know whether they are insolvent or not because they don't want to take a good, hard look at their financial situation. I know it hurts. But you can gather all of your information and a good bankruptcy attorney will easily be able to tell you whether you are insolvent or not. You may not be, but if you are, that is why bankruptcy exists. To give you a fresh start.
I wish nothing but the best of luck to you in 2011 and beyond.