Insolvency and bankruptcy are concepts related to a business or a person who is unable to repay outstanding debts. The process of Bankruptcy begins with a petition filed by the debtor or on behalf of creditors, which is less common.
A person is declared bankrupt “When he/she is incapable of paying their due and payable bills”
Bankruptcy is a legal declaration of one’s inability to pay off debts. When one files for bankruptcy, one compels to pay off what is unpaid with help from the government. In general, there are two main forms of bankruptcy – reorganization and liquidation bankruptcy. Under reorganization bankruptcy, debtors reconstruct their repayment plans to make them more easily met. Under liquidation bankruptcy, debtors sell certain assets in order to make money they can use to pay off their creditors.
Bankruptcy is defined as a successful legal procedure that appears from an application to the admissible court by a legal entity a person in order to have themselves declared bankrupt. Bankruptcy is a court proceeding in which a judge and court trustee inspect the assets and liabilities of individuals and businesses that can’t pay their bills and decide whether to release those debts so they are no longer legally required to pay them.
Insolvency
“The inability of person or corporation to pay their bills as and when they become due and payable”
Insolvency is essentially the character of being that help one to file for bankruptcy. An entity – a person, family, or company – becomes insolvent when it cannot pay its lenders back on time. In general, this occurs when the entity’s cash flow in falls below its cash flow out. For individual debtors, this means that their incomes are too low for them to pay off their debts. For companies, this means that the money flow into the business plus and its assets are less than its liabilities.
Typically, those who become insolvent will take certain steps toward a resolution. One of the most common solutions for insolvency is bankruptcy. Insolvency is the state of being incapable to pay the money unpaid, by a person or company, on time; those in a state of insolvency are said to be insolvent. There are two forms of insolvency cash-flow insolvency and balance-sheet insolvency.
Insolvency is when a legal entity or individual, can no longer expedient its financial liability with its lender or lenders as debts become due
Insolvency and Bankruptcy
Insolvency- it can be defined as a financial condition, where a legal entity or an individual is unable to confirm the financial obligations as they are due for payment. The term insolvency often confused with the term bankruptcy, but both terms are different.
Bankruptcy –it is a situation when the court of law has declared the insolvency of a person or entity and passed orders for its resolution that is the property of the bankrupt is disposed of, so as to pay creditors.
