Are Bankruptcy and Insolvency The Same Thing?
When it comes to managing overwhelming debt, it’s easy to feel like your drowning in legal and financial jargon. When approaching the idea of bankruptcy, you’ll often hear the term “insolvency” or “insolvent” thrown around in conversation. While “bankruptcy” and “insolvency” absolutely go hand in hand, they do not have the same meaning.
Insolvency: An individual becomes insolvent, or enters a state of insolvency when they are crippled by overwhelming debt with no ability to pay them back on time.
Bankruptcy: “Filing bankruptcy” or “going bankrupt” on the other hand, is a common result of insolvency, where the individual undergoes a legal proceeding to free themselves of their debts, by sacrificing assets to repay outstanding debts.
While you can’t be bankrupt without being insolvent, you can be insolvent without being bankrupt. In certain situations there may be alternatives to bankruptcy that can help those in debt recover without having to file bankruptcy.
If you are facing financial hardship, contact an experienced bankruptcy and debt settlement attorney for a free consultation to discuss your options. Becoming insolvent is the first stop when approaching bankruptcy, but it doesn’t mean bankruptcy is inevitable. To discuss your specific situation with our experienced bankruptcy and debt settlement attorneys, contact our office at (702) 998-1188, info@ljlawlv.com, or by scheduling a consultation online.
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