History of Bankruptcy
History of Bankruptcy
At the end of every seven years you shall grant a remission of debts. This is the manner of remission: every creditor shall release what he has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the LORD'S remission has been proclaimed." - Deuteronomy 15:1,2
The origin of the word "bankruptcy" are the Latin words bancus (bench) and ruptus (broken). When a banker could no longer continue lending money, his bench was broken as a sign of inability to negotiate and lend.
The Unites States Constitution gives congress the power to establish "uniform laws on the subject of Bankruptcies" throughout the United States. There were several bankruptcy laws past in the 1800's. These early bankruptcy laws were usually enacted in response to bad economic times. Before the 20th century, bankruptcy rules were more concerned with recovering the debts for creditors, and nearly all bankruptcies were involuntary. Modern rules for bankruptcy are more concerned with reorganizing the debtor's finances rather than punishing the debtor. Although involuntary bankruptcies still exist, they are much less common than voluntary bankruptcy.
The Bankruptcy Reform Act of 1978 created the current United States Code related to bankruptcy.
Bankruptcy and the Bible
"At the end of every seven years you shall grant a remission of debts. This is the manner of remission: every creditor shall release what he has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the LORD'S remission has been proclaimed." - Deuteronomy 15:1,2
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