Insolvency is the inability of an individual or corporation to pay debts as and when they fall due.
The Insolvency Glossary produced by the Australian Securities and Investment Commission (ASIC) provides a list of useful terms in this regard.
The law relating to personal insolvency is legislated by the Bankruptcy Act 1966 (Cth) and is administered and regulated by the Australian Financial Security Authority (AFSA).
Every year, thousands of Australian individuals go broke. Often (in about 50 percent of cases) this is avoidable. There are approximately:
25,000 bankruptcies; and
8,000 corporate (business) administrations,
These appointments affect approximately 400,000 creditors every year.
The key to surviving and avoiding a financial crisis is to understand the early warning signs.