Saying you are “insolvent” is just a fancy way of saying you cannot pay your debts. Yet boiling down a concept to one word is a useful way of working with it, so I’ll use that term as needed.
The reason a word was invented for this situation is that it happens and has always happened since there were debtors and creditors and always will happen so long as there are borrowers and lenders.
Bankruptcy is a remedy for insolvency. It is really that simple. A system of laws and procedures had to be created to deal with that problem because it does not rectify itself. An intervention is needed as the situation is unsustainable and creates blockages in the rest of the financial system.
So if you’re considering bankruptcy, the fundamental question is: Are you insolvent? You probably suspect you are insolvent or you wouldn't be on this website. That is a good indication that the questions is worthy of further exploration.
To actually see the insolvency it has to be quantified. It means doing some accounting on your income and expenses, and adding up the values of everything your own and everything you owe. The good news is that with the help of a professional and computers these days it only takes a couple hours or so to figure out the answer to that question. If the situation is particularly bad though, it takes far less time for a professional to see the insolvency.
If you are insolvent, that is not good. But it is better to face the problem than ignore it. And for those ready to face it, there is nothing so powerful to remedy insolvency as bankruptcy. It is a federal remedy with all the power of the U.S. Government behind it. So long as it is used appropriately, there is no process more effective or efficient in bringing back individuals to solvency.
There are other remedies for insolvency besides bankruptcy, and Leverlaw uses them when appropriate. It is based upon what is best for the client in concert with the client’s goals.
