Past to Modern Bankruptcy

Inability to pay back debt is not a recent concept, however. It appears that debt forgiveness programs have been around for as long as the idea of debt itself. However, 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. Although the contemporary idea of bankruptcy did not exist in ancient Greece. This attempt to make borrowers whole again is obviously much less merciful than the present bankruptcy system, even though debt slaves had legal protection over life and limb and their obligations were wiped after a 5-year term.

Today’s bankruptcy in America is very different from the past remedies. Thankfully, debtors’ prisons are a thing of the past, and asking for debt relief is a common economic activity. Since the times of Genghis Khan and Henry VIII, attitudes against debtors have substantially mellowed, while some stigma still exists.

The Constitution, which grants federal courts authority over bankruptcy issues and permits Congress to create legislation on the subject of bankruptcies, reflects the Founding Fathers’ understanding that bankruptcy was important enough to need a legal structure.

This enumerated power has been used by Congress to draft many laws that would regulate the bankruptcy process. The Bankruptcy Act of 1800 was the first statute, and it only authorized for involuntary procedures. 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.

In order to file for bankruptcy today, one must reveal both their assets and income, with a 6-month window for income disclosures serving as the standard foundation for determining bankruptcy eligibility. Although there are additional factors that could result in a debtor being eligible for chapter 7 even if they do not pass the means test, these situations are rare, so you should see a Houston bankruptcy lawyer to learn more about your alternatives before attempting to file for bankruptcy.