The History of Bankruptcy

Written by jessica Alba

The history of bankruptcy goes back thousands of years, and there is nothing new under the sun. If you have reached the end of your financial rope and you are considering filing chapter 11 or some other legal action, you are not alone; and, it does not mean you are irresponsible or a leech. In this troubled economy, you will be in good company with people from all walks of life, with varying socioeconomic status. You will join financially challenged individuals clear back to biblical times.

Since Recorded History

During the time the Old Testament was written, people have been struggling with money. A lot of individuals became indentured servants to pay off their debt. In addition, a significant amount of any income went to the creditor before the family even had the basic necessities of life.So, without any relief, a debtor may owe someone money for the rest of his/her natural life. In fact, according to the social system of the time, children and grandchildren could inherit debt and have no hope of prosperity or even financial freedom. Therefore, Jewish law provided a system of bankruptcy

For six years, debtors have an obligation to do everything in their power to pay creditors. However, on the seventh year, the year of jubilee, creditors are required by law to forgive any unpaid amount. So, there has always been a way to find relief from debt, whether through poor choices or hard economic times. Of course, the people still have had to deal with cruel creditors, trying to get all of their money, before the year of jubilee. But, for the most part, the system worked.

The Romans

Unfortunately, the Romans have not been a glowing example of handling debtors. For example, back then if you did not pay off creditors, you might be disassembled (a nice way to put it) and divided amongst those to whom you owed money. Of course, this is bizarre, and totally stupid, because creditors will definitely not get their money, if you are dead.

Tyrants

Of course, tyrants are not known for using common sense. It is all about exerting power, and Henry VIII is no exception to the rule. Debtors under his regime are victims of imprisonment and beheadings. Well, surely that solves the problems of debtors. Do not have trouble with money, or you could die.

Henry may be in the history books. But, it is certainly not for his intelligence. Most people do not choose to get sick, fall on hard economic times, or simply make poor decisions that get them in financial trouble. Execution does not teach any lessons.

Americans are Slow Learners

If you have ever read books by Charles Dickens, you already know that Americans are slow learners when it comes to bankruptcy laws and debt relief. The classic novel David Copperfield is a classic example of poor debtor laws. Fathers are put in prison for debt, which leaves an entire family, and often extended family, destitute.

Oftentimes, the debtor is left in prison, until the bill is paid in full. Unfortunately, since the father is the bread-winner, it often meant a life sentence, with starving and begging children. Although novels are a creative story, the historic value Charles Dickens lent his books are true.

Better Late than Never

Finally, debtors have some recourse, without going to jail or selling their firstborn children. Today, whether it is through a series of poor financial decisions, job loss, or various circumstances beyond your control, you can legally claim bankruptcy to get relief from creditors, and hopefully get a fresh new start.

Now, you can no longer be harassed by debt collectors. Even if you own the money, they have laws governing how they can ask for payment. For example, people cannot come to your place of employment, letting your boss and coworkers know of your financial troubles. The information is between you and your spouse, if you have one, and a cosigner that may also be adversely affected by non-payment. Otherwise, it is a private matter.

If a debt collector decides to break the rules, you have recourse to get them in trouble for not following the law. You can file a complaint with the federal trade commission, and this person(s) will be in a boat load of trouble.

Then, you have several options to resolve the debt. You can seek the services of a consumer credit counselor. But, whether it is personal or business debt, there are several types of bankruptcy you can claim, depending on your level of need. But, no matter how much you owe, you cannot be put out of your home, as long as you are paying your mortgage or rent. So, when money is limited, that is the first priority.

If you believe you are at the end of your financial rope, do not give up the ship quite yet. You may not even have to claim bankruptcy. But, if that is the decision of last resort, it does not necessarily mean you will be destitute, even if you have to start over from square one. You simply need to do your homework or ask for professional advice, to see what options are available to help you get debt relief.