Making a debtor pay his debts has always been a concern of society since the beginning of civilizations. At that time, the debtor himself was responsible for the obligation, with his freedom or even with his life. The obligation fell upon the individual and not upon his property.
Roman Law
Roman law contains enforced punishment for the debtor who did not pay his debts. This system lasted until 428 B.C. and was replaced with the promulgation of the Lex Poetelia Papiria, which was introduced in Roman Law the property’s execution. By that law, the debtor’s assets were already dispossessed. With the evolution of societies, it was established that bankruptcy itself could be decreed on three occasions:
- when the debtor was hiding without leaving assets that would settle his debts
- at the request of the debtor
- at the request of the creditor
At that time, bankruptcy extended to all kinds of debtors, merchant,s or otherwise. With the development of credit and commerce, various laws of different countries began to limit this institute’s use only to debtor traders.
The Napoleonic Code of France of 1807 contributed significantly to the constitution of the institute of bankruptcy; also called the Code of Commerce, it restricted bankruptcy to the merchant debtor and continued considering the defaulting debtor as a criminal.
Bankruptcy Court
These laws continued to evolve to protect creditors and ensure the settlement of debts through the laws and the legal process. Nowadays, the entire process is in the hands of the bankruptcy court, who decides on the filer’s inability to pay the debt, establishes the bankrupt’s rights and duties, decrees the collection and custody of assets, the payment to creditors, and the closing of bankruptcy.
If you are considering bankruptcy, contact a Rio Grande bankruptcy attorney to find out how you can get a fresh start.