> Being insolvent means that they can't cover your obligations right now
No, it doesn't. If it did it would mean that everyone with a mortgage is insolvent, as would most businesses (what sort of business keeps a 1:1 debt/cash ratio?). What insolvent means is that you don't have enough cash, and/or assets with enough liquidity to be able to pay your debts.
Banks are fine, because for the most part they can sell debtors for cents on the dollar when they really need the cash.
No, it doesn't. If it did it would mean that everyone with a mortgage is insolvent, as would most businesses (what sort of business keeps a 1:1 debt/cash ratio?). What insolvent means is that you don't have enough cash, and/or assets with enough liquidity to be able to pay your debts.
Banks are fine, because for the most part they can sell debtors for cents on the dollar when they really need the cash.