DEFICIT NET WORTH

A scenario in which liabilities are higher than assets. Deficit net worth can occur for a variety of reasons, but typically it arises when current or future asset values erode unexpectedly. Likewise, in frontier days, land and property often gained or lost value suddenly depending on where the nearest railroad was located. A negative, or deficit, net worth does not necessarily imply bankruptcy. Just as quickly as asset values can plunge, they can also rise.