You cannot honestly be "insolvent" (know you are insolvent) and continue to incur new debt.
There is nothing in 11 USC 523 (Exceptions to Discharge) that presumes you were insolvent outside of the 90 days before filing. The Bankruptcy Code does make a presumption that you are indeed insolvent 90 days before filing, but goes no further.
A creditor would need to prove that you were insolvent.
This can be very difficult to prove. If you looked at my net worth at the time I was running up credit card and other debt, even with the debt load, I had $80K in positive net worth (not negative). Therefore, I was not insolvent at the time I ran up my debt, and had the income to back it up. (American Express even had me do a 4506-T so they could see my IRS returns! The mere fact that they did this and extended me more credit, meant that I wasn't financially unstable to them at the time!)
Insolvency is not defined as more money going out than coming in.
That defines negative cash flow, but not insolvency. The IRS defines insolvency as the excess of liabilities over the fair market value of assets. Again, a creditor would need to prove that you were insolvent at the time you incurred new debt, in order to object to it as deceitful and that you were unable to pay it back. The creditor would file a complaint (also known as an Adversary Proceeding) in order to challenge you as to the dischargeability of the debt.
Adversary Proceedings are miniature lawsuits. While inside the Bankruptcy process, they are no joke and have all the trimmings of a full blown legal proceeding!
This is no small undertaking, and filing an AP in Bankruptcy seems to costs no less than $4K, and I've seen the attorney fees go up to $200K!!! Compounding this is that if the creditor loses the AP, the debtor most certainly will ask for his legal fees to be covered by the creditor. This makes the likelihood that a creditor will file an AP for mere "insolvency" less likely. Even if the creditor thinks there is fraud, they tread very lightly if the debt is under $4K as their liability from not only litigating but also losing, will certainly surpass the debt itself.
General Elec. Capital Corp. v. Janecek, 183 B.R. 571, 575 (Bankr. D. Neb. 1995) (insolvency can be considered, but is not determinative in assessing debtor's intent to deceive).
I also like this one... where the Debtor ran up charges knowing that they could never, in their lifetime, pay them back... Southtrust Bank of Alabama v. Moody, 203 B.R. 771 (Bankr. M.D. Fla. 1996) ("It should not take a rocket scientist to figure out that even if [debtor] lived 1000 years she would still not be able to repay the charges she ran up on her credit cards"),
But then, they say this... Household Card Servs./VISA v. Vermillion, 136 B.R. 225, 226 (Bankr. W.D. Mo. 1992). Cf. Stewart, 91 B.R. at 495 (insolvency alone does not establish intent to deceive); AT & T Universal Card Servs. v. Alvi (In re Alvi), 191 B.R. 724, 733 (Bankr. N.D. Ill. 1996); AT & T Universal Card Servs. Corp. v. Chinchilla, 202 B.R. 1010, 1016 (Bankr. S.D. Fla. 1996) (lack of ability to pay is insufficient basis on which to infer intent to deceive)
For those who like to read and do case studies, the National Review has an awesome review of dischargeability of credit card debt.
I find it very valuable information for those looking at dischargeability issues. It's a lot of reading, and I only suggest it for those looking at this issue specifically.
