What are the consequences of insolvency?

Insolvency is when a person or business can no longer pay its debts. In Washington, insolvency has serious consequences which can affect both individuals and businesses. For individuals, the consequences can include the loss of property and assets, wage garnishment, collection proceedings and the potential of having to declare bankruptcy. Bankruptcy can have a negative effect on a person’s credit score, making it difficult to get loans or mortgages in the future. For businesses, insolvency may lead to foreclosure or liquidation as creditors attempt to recoup their losses. This can mean laying off staff, closing branches and offices, or ceasing operations altogether. Business assets can be sold off to cover debts, and companies may be unable to pay back any investments made by shareholders. In the worst-case scenario, a company going through insolvency proceedings can be sued by creditors or shareholders in civil court. In these cases, a judge may order the company to pay restitution, penalties, and/or damages to those affected. Insolvency can have serious consequences for individuals and businesses alike, and it is important to seek legal advice as soon as possible if insolvency appears imminent. A knowledgeable attorney will be able to provide guidance on the best course of action to take in order to limit the damage.

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What are the consequences of insolvency?

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