Net Worth

When people speak of their wealth and how much they are worth, they are not discussing their assets alone. In general, wealth is measured based on one’s net worth, which takes into account all of one’s assets, but also, all of one’s liabilities. Millionaires, billionaires, and others who are considered to be very well off are also termed as “high net worth individuals,” meaning that their net worth is above one million (or one billion) dollars. Assets alone are not used to measure one’s prosperity.

Negative Net Worth

One’s net worth is determined by subtracting one’s liabilities from one’s assets. When this number returns as a negative, then an individual has what is called “negative net worth.” One may have negative net worth if he or she is in a large amount of debt. Negative net worth, however, does not always mean that the individual will need to file bankruptcy.

As long as the payment plan for the debt is reasonable, the individual is seeing a steady inflow of money, and more large debt is not accrued, then one’s net worth may become positive again over a period of time. For example, one may experience a period of negative net worth after investing a large amount of money in starting up a business. If the business succeeds, then that individual’s net worth will become positive as money comes in. However, if the business flops, then the debtor will need to seek out another way of earning money in order to pay off the loans.

Contact Us

If you would like to learn more about net worth or if you believe you are ready to file for bankruptcy, contact the Austin bankruptcy lawyers of Slater, Kennon & Pugh Ltd.LLP today at 512-338-1100 to speak with an attorney about your questions or concerns.