Insolvency is a financial state where an individual or organization cannot meet their debt obligations as they come due. This situation can arise from various factors, including poor financial management, unexpected expenses, or declining revenues. When insolvent, a person or business may need to seek legal protection or restructure their debts to regain financial stability. There are two main types of insolvency: personal insolvency and corporate insolvency. Personal insolvency typically involves individuals unable to pay their debts, while corporate insolvency refers to businesses facing similar challenges. Both types may lead to legal proceedings, such as bankruptcy, to address the outstanding debts.