Insolvency is a financial state where a person cannot meet debt payments on time.
Bankruptcy is a legal process that happens when the individual declares he or she can no longer pay back his or her debts to creditors.
Bankruptcy is a legal process initiated by a debtor who is unable to repay debts, while insolvency refers to a financial state where liabilities exceed assets.
Bankruptcy involves a court proceeding and formal declaration of bankruptcy, whereas insolvency represents a financial condition or state.
The Bankruptcy and Insolvency Act exists to protect all the parties or stakeholders involved in a consumer proposal or bankruptcy — that includes the debtor, the lenders/creditors, and the Licensed Insolvency Trustee who coordinates and manages the process and filing.