The words insolvency and bankruptcy are often used interchangeably. However, they are not the same thing. The state of being “insolvent” refers to a person being unable to pay off their debts. The money coming in does not match or exceed the amount needed to keep pace with one’s financial obligations. Bankruptcy, by contrast, is a legal solution that is available to some debtors who have become insolvent.
Causes of Insolvency
There are many different reasons that an individual may struggle to remain afloat financially. Some do not have any financial guidance as they mature and are therefore ill-equipped to handle their affairs. In other cases, a change of circumstances can lead to insolvency. Job losses, suffering a reduction of income, a divorce, or unforeseen expenses such as health care costs can quickly compromise an individual’s financial security.
Options in Insolvency
A person considered to be insolvent has more options than just bankruptcy. They may be able to find a way to control their debts without having to file for Chapter 7 or 13 bankruptcy protections. It might be possible to consult with one’s creditors to seek renegotiate the terms of repayment for a particular debt. Alternatively, working with a debt counselor can help you to better budget your funds. In many instances, however, a bankruptcy filing is likely to offer the most permanent and satisfactory resolution to such problems.
If your debts are causing you a tremendous amount of emotional distress, it is time to speak with a Milwaukee bankruptcy attorney. Contact the DeLadurantey Law Office, LLC, today at 414-377-0518 to learn more about your options.