Legal Definitions - insolvent law

Definition: Insolvent law refers to a statute that provides relief to a debtor who is unable to pay their creditors. It is sometimes used interchangeably with bankruptcy law, as there may not be a clear distinction between the two.

Example: If a person owes a lot of money to different creditors but does not have the means to pay them back, they may file for insolvency or bankruptcy. This will allow them to either liquidate their assets to pay off their debts or restructure their payments to make them more manageable.

Explanation: Insolvent law is designed to help individuals or businesses who are in financial distress and cannot meet their financial obligations. It provides a legal framework for debtors to either discharge their debts or reorganize their finances to pay off their creditors over time. The example illustrates how insolvency law can be used to provide relief to debtors who are unable to pay their debts.