Bankruptcy Beginnings

Debt is not a modern concept. History documents that debt forgiveness programs have been around for as long as the idea of debt itself. For example In Greece, there was a procedure in place for a lender to recover their losses when a borrower defaulted on their payments, which resulted in the temporary enslavement of the borrower’s entire family. Historically, debt enslavement attempted to make borrowers absolved of their debt; but, is obviously much more harsh than the present bankruptcy system. Debt slaves had legal protection over life and limb and their obligations were wiped after a 5-year term. Unfortunately, debt slavery still exists in some countries around the word; making it more enticing for predatory lenders to take advantage on a much more concerning scale.

Today’s bankruptcy in America is very different from the past remedies. In modern times, debtors’ prisons are a thing of the past, and asking for debt relief is a common economic activity. However, it is the historical stigma of debt relief that still plagues consumers today.

The Founding Fathers’ had an understanding that bankruptcy was important enough to need a legal structure. The Bankruptcy Act of 1800 was the first statue entered into the constitution. This statue granted federal courts authority over bankruptcy issues and permits Congress to create legislation on the subject of bankruptcies. However, only involuntary bankruptcies were considered at the time.

Voluntary bankruptcies were not allowed until the passage of the Bankruptcy Acts of 1841 and 1867, both of which have since been abolished. The Bankruptcy Act of 1898, which was later amended in 1978, is the first enduring component of American bankruptcy law.

Filing for bankruptcy today, requires that a debtor reveal both their assets and income.  Although there are additional factors that could determine whether a debtor is eligible for bankruptcy, it is advised to seek the counsel of an experienced Dallas bankruptcy lawyer.