Bankruptcy

Bankruptcy - A Historical Perspective

By Attorney Goldstein

Attorney Michael Goldstein first published this article on the history of bankruptcy on the Phillips Law Offices Consumer debt blog March 21, 2012:

When people hear the word bankruptcy, they often say to themselves, ?what is it?? Many people believe that the concept of debt relief is a new or modern topic, and often times, people view the term as a dirty word or with a negative connotation. The truth of the matter is simply the complete opposite. In fact, the idea of filing bankruptcy is as old as the United States of America itself and a very interesting historical topic when viewed in its full context.

Taking a broad look at this topic, debt has been an issue for centuries. In the distant past, it was a crime to not repay creditors, and as a matter of fact, in England in the middle-ages there were debtor?s prisons for those who were found guilty. The standard procedure back then was; if you couldn?t pay your debts, the King would throw you into jail. Debtors would then stay in jail until they were able to repay their creditors, which of course stopped them from being able to work to pay off the debts.

Luckily, things have changed a little bit over the past few hundred years, throughout England and everywhere else, including the United States of America. Looking back to the beginning of our country, bankruptcy was such a hot button topic when the Revolutionary War ended, that the right to file for bankruptcy protection was incorporated into the Constitution. In fact, it is first seen in Article I, Section 8, Clause 4 therefore, as early as 1801, we had bankruptcy laws in the United States of America. The concept of bankruptcy was so important to our Founding Fathers that they gave congress the power to create bankruptcy courts and regulations in Article I and Article III of the United States Constitution, the earliest legal document in our country?s history. The Founding Fathers thought the right to bankruptcy was so important that they provided for it at the beginning of the Constitution, rather than burying it in the end of the document.

Debt relief is something that our Founding Fathers knew was going to be part of the economy. It has been a part of our economy for years, it is not just something new in the last few decades when people started getting and using credit cards, but rather it has been around since the inception of our country. Had the idea of debt relief been so appalling to those drafting our very first set of laws, it would not have been made a part of the Constitution. If it was not so important, the Federal Government would certainly have removed it from the laws and not sponsored it again and again. Congress would certainly not have amended the rules in 1978, or again in 2005 to add more complexities and protections to the law of bankruptcy, under Title 11 of the United States Code.

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Full post as published by Bankruptcy Articles & Blog on March 22, 2012 (boomark / email).