Insolvency

Insolvency means a person or company is unable to pay their debts as they fall due, or their liabilities exceed their assets. It is a financial state, not automatically a legal process, though it can lead to one, such as bankruptcy for an individual.

For a scam victim, a defendant’s insolvency matters because even a successful judgment for damages may collect little or nothing if the defendant has no assets and other creditors are also competing for what remains.

This is one reason speed matters in a scam case. Acting before funds are spent, moved, or a defendant becomes insolvent generally improves the realistic chances of recovery.

When it matters

Checking, where possible, whether a defendant appears to have assets is a practical step before deciding how far to pursue a claim.