(a) A debtor is insolvent if the sum of the debtor’s debts at a fair valuation is greater than the sum of the debtor’s assets at a fair valuation.

Terms Used In Alabama Code 8-9B-3

  • Asset: means property of a debtor, but the term does not include:
    (i) property to the extent it is encumbered by a valid lien;
    (ii) property to the extent it is generally exempt under nonbankruptcy law; or
    (iii) an interest in property held in tenancy in common for life with cross contingent remainder to the survivor in fee to the extent it is not subject to process by a creditor holding a claim against only one tenant. See Alabama Code 8-9B-2
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Debtor: means a person that is liable on a claim. See Alabama Code 8-9B-2
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Property: means both real and personal property, whether tangible or intangible, and any interest in property whether legal or equitable and includes anything that may be the subject of ownership. See Alabama Code 8-9B-2
  • Transfer: means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, license, and creation of a lien or other encumbrance. See Alabama Code 8-9B-2
(b) A debtor that is generally not paying the debtor’s debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the party against which the presumption is directed the burden of proving that the nonexistence of insolvency is more probable than its existence.
(c) Assets under this section do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors or that has been transferred in a manner making the transfer voidable under this chapter.
(d) Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.
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