When You Are No Longer Able To Pay Your Debts
What does it mean to say that someone is insolvent. Generally speaking, someone may be insolvent, when based on their current financial situation, they can no longer pay their debts as they come due.
For purposes of our discussion, the bankruptcy code defines the term insolvent, under §101(32). If we are talking about a person who is no longer able to pay their debts as they come do, then we look to section 101(32)(a). Here we find the bankruptcy code defines it as 'insolvent means -with reference to an entity other than a partnership and a municipality, financial condition such that the sum of such entity's debts is greater that all of such entity's property, at a fair evaluation, exclusive of. . . .".
So under the first part of the definition, we find that this person is insolvent if the total amount of the debts that person owes is greater than all their assets valued at its fair market valuation. However, the second part of that definition teases out any assets that person attempts to hide or fraudulently transfer to another person, etc. Thus, it reads "exclusive of property transferred, concealed, or removed with intent to hinder, delay, or defraud such entity's creditors", and also property that you are able to exempt in your bankruptcy case when it further states, "and property that may be exempted from the property of the estate under section 522" of the bankruptcy code. I wrote a previous blog that is worth reading entitled Fraudulent Transfers and 11 U.S.C. §523(a)(2)(A) of the Bankruptcy Code's discharge exceptions, and another blog that dealt with property exemptions, and one of particular interest that dealt with IRAs.
If you find yourself in your current financial situation with no ability to pay your debts as they come due, and you're worried that the debt collections will soon follow, then CALL US TODAY at 989-891-9780 for your free initial bankruptcy consultation. It is always good due diligence on your part to know all your options at your disposal to deal with this financial distress you find yourself in.
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