How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
A new question is answered every 9 seconds
Ask a Bankruptcy Law question
Type Your Bankruptcy Law Question Here...
characters left:
Bankruptcy Lawyers are Online Now

Insolvency Rules and Laws

What is insolvency?

Insolvency is when someone is unable to pay off their debt. When the amount on money coming to a person or business is short which results in being unable to pay debts as they are due in considered Cash Flow Insolvency. Balance Sheet Insolvency is where someone has negative possessions and where the responsibilities of these possessions are higher. Insolvency is not the same as bankruptcy but instead it is the decision of insolvency that is made within the court of law that follows up with the legal information that is meant to decide the insolvency.

What is the difference between insolvency and bankruptcy?

Bankruptcy is defined as the legal process, that is normally caused by insolvency when a person is able to remove most of their debt and then goes through a judicially controlled of reorganization or liquidation for the advantage of that person’s creditors. Now as for Insolvency this is a situation while the bankruptcy is taking place. Insolvency is also legally defined as the process of not being able to pay off all their debts as they are due, or in certain situations of businesses.

In the state of Maryland in a Chapter 7 bankruptcy can the court assigned trustee instead use UCC 1-201 (23) insolvency test or only bankruptcy statute 101(32)?

In this case the statute only give three different types of definitions of insolvency one being “ceased to pay” “cannot pay” and finally “within the meaning of federal bankruptcy law”. The court within the bankruptcy cannot use the first two definitions to decide on insolvency and the court is required to find a decisions of insolvency from the definition that is stated within the Bankruptcy Statute 101(32).

If a bank is going to foreclose on a home even though there is a Mortgage Forgiveness Debt Relief Act if the individual decides to file bankruptcy after the foreclosure will their tax responsibility be removed or do they have to file before the bank removes the debt?

In this case if the individual decides file the debt of the mortgage, whether or not as to when they file, the debts removed from bankruptcy will not be filed as taxable income. Even if they do not file bankruptcy they will have the ability to file for insolvency within the IRS. When they file for insolvency with their tax return, they can do this by filing the IRS form 982, “Reduction of Tax Attributes Due to Discharge of Indebtedness’’. They may be required to send the IRS a complete letter with a financial statement that shows their insolvency. They may also want to keep in mind that the IRS forgives removed debt as income only to the coverage of insolvency.

If an individual has already foreclosed on 3 rental homes and 1 primary home and now have a 1099A, 1099C and a 1099G if they filed bankruptcy are they allowed to include all the tax liabilities in the bankruptcy or can they file insolvency?

In this case the primary home for the 1009C will not be considered with their tax liability since it is considered exempt, as for the other home they will be considered tax liabilities. Also, filing insolvency would be available to this individual but it will not avoid the upcoming issues with the bankruptcy. The Bankruptcy will also not completely remove some of the tax liabilities. Taxes for a tax return are supposed to be filed within three years before the date of filing bankruptcy, or:
A. The taxes that are charged by the IRS within 240 day before filing bankruptcy.
B. Taxes that are not charged but still able to be charged;
C. Taxes that are for tax returns that were filed late and that were filed within two years before filing bankruptcy; or
D. The taxes of the nonpayer who had committed the fraud that was related to a tax return or someone who intentionally tried to avoid beat the taxes that were required to be discharged.

When dealing with the decision to either file bankruptcy or file insolvency can often lead to many questions like what is the difference between bankruptcy and insolvency, or what is the insolvency rules? These different complex questions can be answered by the Legal Experts online.
Ask a Bankruptcy Law question
Type Your Bankruptcy Law Question Here...
characters left:
Bankruptcy Lawyers are Online Now

How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
  • Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
  • He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX
 
 
 

Meet The Experts:

 
 
 
  • Ron

    ASE Certified Technician

    Satisfied Customers:

    21205
    23 years with Ford specializing in drivability and electrical and AC. Ford certs and ASE Certs
< Last | Next >
  • http://ww2.justanswer.com/uploads/FO/fordguy4u/2011-12-17_222940_HPIM1257.64x64.JPG Ron's Avatar

    Ron

    ASE Certified Technician

    Satisfied Customers:

    21205
    23 years with Ford specializing in drivability and electrical and AC. Ford certs and ASE Certs
  • http://ww2.justanswer.com/uploads/lyeung1/2010-07-25_032152_tn_IMG_0241.JPG Dr. Y.'s Avatar

    Dr. Y.

    Urologist

    Satisfied Customers:

    18396
    I am fellowship trained specializing in general urology and reconstructive urology.
  • http://ww2.justanswer.com/uploads/docjohn174/2008-12-13_170143_johnask.jpg John's Avatar

    John

    Home Appliance Technician

    Satisfied Customers:

    13453
    Appliance repair business owner for over 43 years.
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Lawyer

    Satisfied Customers:

    8492
    JD, BBA Over 25 years legal and business experience.
  • http://ww2.justanswer.com/uploads/dermdoc19/2010-09-30_160749_Photo_122807_015.JPG dermdoc19's Avatar

    dermdoc19

    Dermatologist

    Satisfied Customers:

    3855
    30 years practice in general and cosmetic dermatology
  • http://ww2.justanswer.com/uploads/BI/birddoctor/2012-6-22_173214_birddoctor.64x64.png Dr. Pat's Avatar

    Dr. Pat

    Bird Veterinarian

    Satisfied Customers:

    3384
    25+ years working primarily or exclusively with birds
  • http://ww2.justanswer.com/uploads/RY/rydergar/2012-6-6_192240_IMG0328.64x64.JPG Dr. Gary's Avatar

    Dr. Gary

    Cat Veterinarian

    Satisfied Customers:

    3299
    DVM, Emergency Veterinarian, BS (Physiology)
 
 
 

Recent Insolvency Questions

  • Hello, I have been working on settling debts and did the large

    Hello,
    I have been working on settling debts and did the large balance accounts last year. This year, 2014, I had one carry over in January. That one will be $2000 of forgiven balance for 2014 tax reporting. I did this to spread out my tax exposure, but later found out I was eligible to claim insolvency on the 2013 return, so it was not taxable.

    This year I'll have $2000 of forgiven balance for 2014 tax reporting. I had one $3,000 credit card that I got a payment plan for. (I believe that's better to rebuild my credit score). I have one last card that is in question for what to do and that's what my question is for today. I'm looking for advice on whether or not to settle this smaller balance account. I talked to Chase in March and they said the balance was too small to offer a payment plan $500. They offered me a settlement at that time for 50%. I didn't have the money then. My question is whether or not to try to settle this. account. It's small and I can try to just pay it down. How much more would my credit be hurt by taking the settlement vs my credit improved by paying it off? My score is around 550 now.
  • For Leon: Hi LeonI am still concern about the Passport matter of

    Hi Leon, I am still concern about the Passport matter of my discharge hearing at the high court. The insolvency seems suspicious about how could I able to travel in and out from Malaysia in 2012. The immigration actually block of my travelling status already as I call bankrupt . THat's why they ask where I am to my brother in Law when He try to pay off the debt . I afraid they want the proof of passport when court hearing for discharge. Kindly advise of my concern.

  • Hi,I am currently in the proceeding of getting discharge

    Hi, I am currently in the proceeding of getting discharge from the high court regarding my debt in Malaysia. The insolvency department has suspicious of where I am. I am currently Australian last year I travel back to Malaysia with Australian passport to met the insolvency. I cannot disclosed to them I am currently Australian. They always ask where I am. I just used my Malaysian Identity card for the discharge of bankruptcy. May I know will it usually the insolvency department has to contact the immigration to release my travelling status after I pay. I afraid they will find out about I am holding foreign passport. Would you think with the Malaysian identity card will be sufficient for the discharge. I do not know how the court run. The debt has been paid off but I afraid they want to ask for my passport Malaysia but it has already


    expire and I am now in Australia.

< Last | Next >