The state of being unable to pay debts when they become due, or having liabilities that exceed assets.
From Latin 'in-' meaning not, plus 'solvere' meaning to loosen or pay, with the suffix '-cy' indicating a state or condition. The financial meaning developed in the 17th century from the literal sense of being unable to 'dissolve' or settle one's obligations.
The Latin root 'solvere' gives us both 'solve' and 'dissolve,' revealing how ancient Romans conceptualized debt payment as literally loosening or untying bonds of obligation. Modern bankruptcy law still reflects this metaphor of release and dissolution.
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