Bankruptcy Through the Ages

In ancient Rome, debtors who were unable to pay off their debts faced a cruel and harsh bankruptcy system. The creditors would seize all their property and sell it to one person. If that did not satisfy the debt, the debtor would still owe the remaining sums. The debtor would be left with nothing while still owing the money. Often, a debtor faced starvation. A debtor would likely have to borrow more money, forever perpetuating the difficult circumstances.

At a point in time, the Romans took a debtor and executed him for not paying off debt. After the execution, the Romans cut the debtor’s body into various pieces, one piece per creditor, and then sent a piece to each creditor.

England

England during the Middle Ages saw the creation of debtor’s prison, wherein a debtor who was unable to pay his or her debts was sent to debtor’s prison. The debtor remained incarcerated in debtor’s prison until someone else mercifully paid off those debts.

Ancient Greece

Ancient Greece showed no mercy to someone unable to pay his or her debts. If a debtor was unable to pay a debt, that person and his or her family were sold as debt slaves. The part of Greece he or she lived in determined a debt slave’s term. Some areas had a five-year rule while other areas had no cap on debt slavery.

The Old Testament

The Old Testament has a different method for dealing with debtors unable to pay off debt. In Deuteronomy 15: 1-3, the scripture states: “At the end of every seven years you shall grant a release. And this is the manner of the release: every creditor shall release what he has lent to his neighbor or his brother, because the Lord’s release has been proclaimed.” Congress codified these verses in the 1938 Bankruptcy Act by creating the seven-year rule for filing bankruptcy.

United States

The United States Congress initially created bankruptcy laws in response to economic upheaval, figuring that the economy needed a mechanism to properly deal with debt. Congress passed the first bankruptcy act in 1800 in response to economic conditions. Congress repealed the law in 1803 when economic conditions improved. During the 1800s, Congress created various bankruptcy laws and repealed shortly afterward. For instance, Congress passed bankruptcy laws in 1867 in response to the difficult economic conditions following the Civil War. Congress repealed those laws in 1878.

Eventually, Congress created a comprehensive bankruptcy system that seeks to rehabilitate the debtor, not punish him. While it seems that, on a conceptual level, bankruptcy law is here to stay, Congress still tweaks the Bankruptcy Code to manage economic shock or to provide economic fairness. For instance, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, better known as BAPCPA, that made complying with bankruptcy rules more difficult. Congress felt that too many people took advantage of the bankruptcy system, so it tightened the rules. Through BAPCPA, bankruptcy filing became more fair.

If you are facing mounting debt problems, contact the Bay-area law firm of Melanie Tavare, an experienced consumer bankruptcy attorney.

Bankruptcy Through the Ages