Insolvency: meaning, definitions and examples

This term is used in a legal and financial context to describe a situation where a person or business cannot pay their debts when they are due.

• The company filed for insolvency after failing to meet its financial obligations.
• Insolvency can lead to bankruptcy if no solution is found.

This term is used in legal settings to describe the formal process when a person or organization is declared unable to pay their outstanding debts. It often involves legal proceedings.

• After months of struggling, the store declared bankruptcy and shut its doors.
• Following their bankruptcy, they had to sell their assets to repay creditors.

This word is used generally to describe the state of owing money or obligations to another party. It can refer to both individuals and organizations.

• Many students graduate with a significant amount of debt from student loans.
• Having too much debt can severely impact your credit score.

This term is used to describe a person who has no money. It is often used in an informal context and can carry a negative connotation.

• After losing his job, he found himself penniless and in need of assistance.
• The once wealthy businessman became penniless due to poor investments.

Used when a person or company is unable to pay their debts on time, but it doesn't necessarily mean they've officially declared bankruptcy.

• The company's insolvency was evident from its inability to meet payroll
• The legislation focuses on how to handle insolvency situations effectively

Refers to a legal process where individuals or companies officially declare their inability to pay off their debts, often involving court proceedings.

• He filed for bankruptcy after accumulating enormous debts
• The company declared bankruptcy to reorganize its finances under the court's supervision

Describes the general state of owing money, without implying immediate financial distress or legal proceedings.

• His indebtedness grew due to multiple loans and credit card bills
• The government's indebtedness to foreign nations has reached alarming levels