Insolvency

Mr Micawber in David Copperfield, Charles Dickens, 1849.

Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and six pence, result happiness. Annual income twenty pounds annual expenditure twenty pounds ought and six pence, result misery.

You can be insolvent without being bankrupt, but you can’t be bankrupt without being insolvent.

Confused yet? Many people think of the two as the same thing, but they are very different. Insolvency is a problem that bankruptcy is designed to solve.