A Bankruptcy Lawyer’s Blog

The Evolution of Bankruptcy

The bankruptcy laws that we are familiar with today originally started in England during Henry VIII’s rule. The main difference, however, is that the laws were created in order to help the ones extending credit…not those receiving it. The penalties for declaring bankruptcy were also much, much more harsh than they are today. In those days the penalty was either imprisonment or death.

As time went by, the laws evolved and eventually became less and less demanding of the person in debt. Finally, during the 1600′s, more credit opportunities became available and also bankruptcy became known as an unfortunate, but necessary, action. Many people in England often fled to the new colonies in order to run from their creditors, thus establishing debtor’s colonies. The state of Georgia in the United States was the most notable of these. Eventually these debt fugitives would work the land, make money and finally pay off their debt.

The first official US Bankruptcy Law was established in 1800 but it was only in response to land speculation. It’s specific intentions thus caused it to be repealed in 1803. From 1841 to 1867 many bankruptcy laws were created and then repealed, based solely on the fact that the laws were created to assist in solving a crisis of some sort and were not created to last very long. The majority of these laws favored the creditor and as with most bankruptcy laws up until the 20th century, it’s main purpose was to assist the creditor in having the funds, land, etc returned.

Also, most bankruptcies prior to the 20th century were involuntary on the debtor’s part, and forced by the government. While involuntary bankruptcy still exists today, it is much, much more rare. The Bankruptcy Act of 1898 was the first of it’s kind to actually hold some longevity, as it was in place for eighty years. There were, however, issues with this law.

Most notably, there were no time constraints between declaring bankruptcy. Therefore, a debtor could receive credit he knew he could not pay back, file bankruptcy and repeat the cycle as many times as he wished. The 1978 Act also changed bankruptcy in many ways. The biggest change was it created business bankruptcy, better known as Chapter Eleven, and a much more effective individual bankruptcy, known as Chapter 13. The most recent bankruptcy legislation occurred in 2005 with George Bush signing the Bankruptcy Abuse Prevention and Consumer Protection Act. This overhaul made significant changes to chapter 13 and chapter 11 cases of bankruptcy.

In the Milwaukee and Waukesha area Michael Burr specializes in bankruptcy and debt relief services. Waukesha Chapter 13 bankruptcy is an effective way to eliminate many types of debt and have a fresh financial start. Contact Attorney Michael Burr directly. He understands what you are going through and can help you get on with your life. – http://www.burrlawoffice.com