--- title: What is Insolvency and Can it Happen to You? description: Insolvency is a financial state where you simply can not afford to pay your financial commitments. Close to 70% of Australians said they are experiencing financial distress. image: https://lanyana.revivefinancial.com.au/hubfs/What-is-Insolvency-and-can-it-happen.jpg --- [![DR-Logo---Powered-by-RF-(2021)-137x60px](https://lanyana.revivefinancial.com.au/hubfs/DR-Logo---Powered-by-RF-(2021)-137x60px.png)](https://debtrescue.com.au) Menu [Apply Online](https://solutions.debtrescue.com.au/online-assessment-form) [1800 003 328](tel:+611800003328) 1800 003 328 - [Recent Articles](https://solutions.debtrescue.com.au/articles) - [Debt Consolidation](https://solutions.debtrescue.com.au/articles/tag/debt-consolidation) - [Debt Agreements](https://solutions.debtrescue.com.au/articles/tag/debt-agreements) - [Informal Agreements](https://solutions.debtrescue.com.au/articles/tag/informal-agreement) - [Debt Relief](https://solutions.debtrescue.com.au/articles/tag/debt-relief) - [Bankruptcy](https://solutions.debtrescue.com.au/articles/tag/bankruptcy) - [Budgeting](https://solutions.debtrescue.com.au/articles/tag/budgeting) - [Business Debt](https://solutions.debtrescue.com.au/articles/tag/business-debt) - [Credit File](https://solutions.debtrescue.com.au/articles/tag/credit-file) - [Education](https://solutions.debtrescue.com.au/articles/tag/education) - [News](https://solutions.debtrescue.com.au/articles/tag/news) - [Research](https://solutions.debtrescue.com.au/articles/tag/research) - [1800 003 328](tel:+611800003328) Talk to a Professional Apply Online [1800 003 328](tel:+611800003328) Call Now # What is Insolvency and Can it Happen to You? Posted by [Debt Rescue](https://lanyana.revivefinancial.com.au/articles/author/debt-rescue) on Sep 27, 2012 4:12:00 AM - [Tweet](https://twitter.com/share) [![What-is-Insolvency-and-can-it-happen](https://lanyana.revivefinancial.com.au/hubfs/What-is-Insolvency-and-can-it-happen.jpg)](https://lanyana.revivefinancial.com.au/articles/what-is-insolvency-and-can-it-happen-to-you) ## **What is Insolvency?** Insolvency is a financial state where you simply can not afford to pay your financial commitments. Close to 70% of Australians said they are experiencing financial distress. Of that near 70%, thousands are experiencing severe debt. When your debt gets to the point when you can no longer make the repayments when they  fall due, you enter a state of insolvency. Insolvency means you are in a financial position where you don't have enough money to pay your debts when they fall due. There are two types of insolvency, cash-flow insolvency and balance sheet insolvency. Cash-flow insolvency is when your money won't cover your debts but you may have enough equity in assets to cover them. Balance-sheet insolvency is when you neither have enough money and the value of your assets isn't high enough to cover your liabilities (debts). ## **Insolvency Versus Bankruptcy: There is a Difference** Being in a state of Insolvency and having to declare bankruptcy are often confused and seen as one in the same. However insolvency and bankruptcy, while related, are two very different things. Insolvency is defined as a financial condition and is a word used to describe a position you are in. [Bankruptcy](https://debtrescue.com.au/declare-bankruptcy/) is a legal procedure which arises if an insolvent person cannot find a way to improve their situation. There are plenty of solutions an insolvent person can pursue before resorting to declaring bankruptcy. Debt Rescue is a personal debt management company which specialises in providing these solutions. ## **Positive Solutions to Your Bad Debt** As soon as you become insolvent you must take immediate action to rectify your financial situation. This can mean generating cash by getting another job or selling unused household items, cutting back on living expenses or [consolidating](https://debtrescue.com.au/debt-consolidation/) or refinancing your current loans and debts. ![Is-Your-Business-In-Financial-Distress](https://lanyana.revivefinancial.com.au/hubfs/DR%20Blog%20CTA%20Banner%20-%20Personal%20Debt%20Solutions.gif) If your debt is more severe, Debt Rescue might suggest you enter a [Debtstroyer Agreement](https://www.debtstroyer.com.au). This allows the experienced case managers at Debt Rescue to look at your personal finances to find out how much you can afford to repay. From this information, they will negotiate with your creditors to develop an informal agreement which allows you more time and space to pay off a negotiated amount from your debts. If your creditors don't agree to the Debtstroyer Agreement, Debt Rescue could then propose a formal [Debt Agreement](https://debtrescue.com.au/debt-agreement/). While this is considered a form of bankruptcy, it won't have the same restrictions and ramifications, allowing you a little more freedom. ## **Take Action Now to Avoid Being Insolvent** If you think you are heading down the path to insolvency, call Debt Rescue today and Talk to an Aussie Who Cares. They can help you on the road to recovery before bankruptcy becomes your only option. Topics: [Debt Relief](https://lanyana.revivefinancial.com.au/articles/tag/debt-relief) ## More Articles - Recent Articles - Debt Consolidation - Debt Agreements - Informal Agreements - Debt Relief - Bankruptcy - Budgeting - Business Debt - Credit File - Education - News - Research ### Subscribe Here! ### Get the Latest Debt Free and Budgeting Advice straight to Inbox Free ### Recent Posts ### If you are in too deep with debt, we here to rescue you. We have the right solution for your situation. Contact us today. No obligations, just solutions! ## Talk to an Aussie who cares. [Get Started](https://solutions.debtrescue.com.au/online-assessment-form) [![DR-Logo-v3-1](https://lanyana.revivefinancial.com.au/hubfs/DR-Logo-v3-1.png)](https://debtrescue.com.au/) **Affiliated with:** ![ias-white-logo](https://lanyana.revivefinancial.com.au/hs-fs/hubfs/ias-white-logo.png?width=250&height=118&name=ias-white-logo.png) **Member of:** ![pipa_logo_white](https://lanyana.revivefinancial.com.au/hs-fs/hubfs/pipa_logo_white.png?width=250&height=72&name=pipa_logo_white.png) [Privacy Policy](https://debtrescue.com.au/privacy-policy/) | [Terms of Use](https://debtrescue.com.au/terms-of-use/) © 2019 Debt Rescue. All rights reserved. Debt Rescue Pty Ltd is a company that is part of Revive Financial Group Pty Ltd (Group). All of our Australian Credit Licenced activities within our Group are undertaken by our related bodies corporate Revive Financial Lending Pty Ltd ACN 152 573 610, Australian Credit Licence 418721 and Revive Financial Pty Ltd ACN 621 446 697, Australian Credit Licence 503321 and Revive Debt Agreements Pty Ltd CAN 133 509 654, Authorised Credit Representative Number 452856 and Registered Debt Agreement Administrator Number: 1337. Liability limited by a scheme approved under professional standards legislation. ## What Kind of Debts Do You Have? ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Credit-card-icon.png) Credit/Store Card ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Personal-loan-icon.png) Personal Loan ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Pay-day-loan-icon.png) Pay Day Loan ![](https://debtrescue.com.au/wp-content/uploads/2020/11/tax-debt-icon-green.png) Tax Debt ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Unitilties-Icon.png) Utility Bill ![](https://debtrescue.com.au/wp-content/uploads/2020/11/other-icon.png) Other Please select at least one type of unsecured debt. Next ## How Much Money Do You Owe? $10,000 $1,000 $100,000+ Next ## Find Out How To Reduce Your Debt ### Your First Name ### Your Last Name ### Your Email ### Your Phone Phone number must be 10-digits long and begin with a 0. (e.g. 04 1234 5678) ### Your Post Code Post code must be 4-digits long (e.g. 4567) Some of your details appear incorrect. Please update the highlighted fields and re-submit. Submit ## Congratulations! ### You've taken the first step to becoming debt free Let's keep the momentum going and complete our assessment form to receive an instant debt analysis. [Start Instant Assessment](https://solutions.debtrescue.com.au/online-assessment-form) By submitting this form you acknowledge that you have read and accept our [Privacy Policy](https://lanyana.com.au/privacy-policy/)