When your liabilities exceed your assets, you:
A) are bankrupt.
B) have growing equity.
C) have a positive net worth.
D) are insolvent.
E) have less real assets than investments.

Question

Quizplus · Accepted Answer

When your liabilities exceed your assets, you are insolvent. This means that you owe more than you own and may not be able to pay your debts. Bankruptcy is a legal declaration of insolvency. Growing equity and positive net worth refer to situations where assets exceed liabilities. Having less real assets than investments is not the same as being insolvent.

When Your Liabilities Exceed Your Assets, You