Definition - What does Insolvency mean?
Generally, insolvency is the state of a person or entity that cannot pay their debts or is currently under some type of bankruptcy. In other words, being in a state of insolvency means that if all of the assets were liquidated, then the person would still be in a position where they could not pay off all of their debts.
Justipedia explains Insolvency
In the United States, the term insolvency specifically refers to when a person or entity cannot pay their debts or when a person or entity is insolvent as defined by the Bankruptcy Code. Typically, when a person or entity in the United States becomes insolvent, then they will file for one of the various types of bankruptcy offered in the United States.
Step by Step: Here’s What Happens When You're Charged with a Crime