The Legal and Economic Definition of Insolvency By Anthony Faber Perpetual (C)Copyright (2012 C.E.) By Anthony J.

Fejfar and Neothomism, P.C. (PA) and The American People and The People of God and The People. The legal and economic definition of insolvency is where the debts or a person or business exceed their assets. However, keep in mind that assets include real property, personal property, and personal or business goodwill. For example, let us say that Joe bought a house for $200,000 with a down payment of $20,000. Now, some jerk comes along who is a political enemy of Joe and tries to force Joe into bankruptcy for insolvency for having a $9,000 monthly salary with a mortgage debt of $180,000 which secured the note which provided the money for Joe to buy the house. The Jerk argues that Joe is insolvent because his debt of $180,000 exceeds his monthly income of $9,000. Upon closer examination, however, it is clear that Joe is not insolvent:

Joe owns his home with a economic value of $200,000, which of course is an asset which has the value of $200,000. Also Joe has his monthly income of $9,000. Thus, Joe has assets of $210,000 and a debt of $180,000, and thus Joe is not insolvent since the economic value of his assets exceeds his debt by $30,000. be accused of being a vagrant. Thus, Joe cannot be forced into bankruptcy and cannot