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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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.


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)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.


1 inability to pay debts as they fall due.
2 excess of liabilities over assets.
Collins Dictionary of Law © W.J. Stewart, 2006

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.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
References in periodicals archive ?
"It's worth noting high-profile insolvencies can have a knock-on effect for others, too.
The Insolvency Service, which released the figures, said the fall in personal insolvencies was driven by a decrease in IVAs, which reached a record high in the second quarter of this year when 17,114 were recorded, but fell by 18% in the third quarter to reach 14,040.
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 14.7% compared to the first quarter of 2013 and 16.1% on the same quarter for the previous year.
rate By contrast, corporate insolvencies in England and Wales posted a 12% quarterly increase in Q2 2013 and were 0.5% above the same quarter in 2012.
THE latest analysis into corporate insolvencies has revealed a bad year for hospitality and leisure in the region.
Figures for Scotland show that while the number of insolvencies is down by 6.9% since November 2010, the percentage of the business population failing remains unchanged from last November's 0.07%.
Dubai A clear legal framework to deal with insolvencies and corporate bankruptcies that define the rights of both debtors and creditors are important to attract both foreign investments and foster domestic entrepreneurship in the region, experts at a conference on insolvency reforms in Dubai said yesterday.