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An incapacity to pay debts upon the date when they become due in the ordinary course of business; the condition of an individual whose property and assets are inadequate to discharge the person's debts.


n. 1) the condition of having more debts (liabilities) than total assets which might be available to pay them, even if the assets were mortgaged or sold. 2) a determination by a bankruptcy court that a person or business cannot raise the funds to pay all of his/her debts. The court will then "discharge" (forgive) some or all of the debts, leaving those creditors holding the bag and not getting what is owed them. The supposedly insolvent individual debtor, even though found to be bankrupt, is allowed certain exemptions, which permit him/her to retain a car, business equipment, personal property, and often a home as long as he/she continues to make payments on a loan secured by the property. (See: bankruptcy)

See: bankruptcy, default, dishonor, failure, indigence, nonpayment, poverty


1 inability to pay debts as they fall due.
2 excess of liabilities over assets.

INSOLVENCY. The state or condition of a person who is insolvent. (q. v.) .
     2. Insolvency may be simple or notorious. Simple insolvency is the debtor's inability to pay his debts; and is attended by no legal badge of notoriety, or promulgation. Notorious insolvency is that which is designated by some public act, by which it becomes notorious and irretrievable, as applying for the benefit of the insolvent laws, and being discharged under the same.
     3. Insolvency is a term of more extensive signification than bankruptcy, and includes all kinds of inability to pay a just debt. 2 Bell's Commentaries, 162, 6th ed.

References in periodicals archive ?
There was also an increase in company insolvencies.
Richard Wolff, North West chair of R3 and head of corporate recovery and insolvency at law firm JMW, said: "Overall personal insolvencies in the North West reached their peak in 2010 and the number has declined in every single area in the region since then.
This was a fall of 2% from the number of personal insolvencies recorded in 2013 and the fourth consecutive annual drop.
Stuttering growth, low interest rates, and creditor forbearance have helped keep corporate insolvencies lower than they normally would have been since the recession.
The rate of total personal insolvencies decreased by 14.
rate By contrast, corporate insolvencies in England and Wales posted a 12% quarterly increase in Q2 2013 and were 0.
The industry is significantly worse off compared to this time last year with a 30% increase in insolvencies in the last quarter of 2011 compared to the last quarter of 2010.
Glenrothes, Kirkcaldy and Livingston have the highest concentration of insolvencies in Britain.
The number of corporate insolvencies will stand at 851 in the first three months of this year and thus be at the level of the pre-crisis years 2007 and 2006.
It also includes special regional reports from Europe, Asia and Australia, and updates on agency and government policies that impact corporate insolvencies, as well as general corporate insolvency materials, companies regulation, partnerships and societies regulations, court liquidation, creditors' voluntary liquidation, intangible assets, charges and fees and priorities.
The record of the funds speaks for itself; since inception of the system more than 30 years ago, guaranty association managers have administered more than $17 billion in claims payments--claims that would otherwise be unmet--related to 200 different insolvencies.
That figure mirrors the number of insolvencies in 2000, which represented a sharp rise over the seven insolvencies reported in 1999.