JV Jones and YourPalSal discuss the effects liabilities have on your risk taking.

Anybody who has gone through the process of getting a loan knows the first thing they want to know is what your assets are, and then after that, what your liabilities are. If you have no liabilities, they then ask about risks you may have. The reason they do this is because you can only take on risk as long as you have enough assets to absorb the negative outcome of that risk.