A situation in which a person or company has more liabilities than
assets. This may happen to a person if, for example, he/she
owes more on his/her
mortgage than the home is worth. A company may have a deficit net worth after consistently posting
operating losses over an extended period of time. It is important to note that a deficit net worth does not necessarily mean that
bankruptcy is inevitable, but it may prevent the
debtor from receiving new
credit necessary to maintain operations. It is also called negative net worth.