Legal Definitions - notorious insolvency

Definition: Notorious insolvency is a term used in Scots law to describe the stage of insolvency in which a debtor publicly acknowledges their inability to pay their debts under the statute. This stage is usually followed by sequestration, which is notorious insolvency coupled with the appointment of a trustee for creditors. It is also known as notour bankruptcy.

Example: If a person owes a lot of money to their creditors and they cannot pay it back, they may declare themselves insolvent. This means that they publicly acknowledge that they are unable to pay their debts. Once they have done this, they are considered to be in a state of notorious insolvency.

Explanation: Notorious insolvency is a legal term that describes the stage of insolvency in which a debtor has publicly acknowledged their inability to pay their debts. This is an important stage because it allows creditors to take legal action against the debtor to recover their money. Once a debtor has declared themselves insolvent, they may be subject to sequestration, which is a legal process that involves the appointment of a trustee to manage their assets and distribute them to their creditors.