The History of Bankruptcy
In the modern era, bankruptcy has helped millions of people achieve a fresh start. Although the exact laws and regulations surrounding bankruptcies are relatively new, the concept itself dates all the way back to medieval times. If you are worried about the social stigma attached to bankruptcies, it helps to realize that this has been an accepted practice for hundreds of years. So how did the first bankruptcies begin, and how has this led to our modern understanding of bankruptcy in Massachusetts?
If you wish to declare bankruptcy, get in touch with a qualified, experienced attorney as soon as possible. Our legal professionals can help you decide whether or not this is the right choice based on an initial consultation. If you do wish to move forward, we can help you navigate the bankruptcy process so that you can achieve a fresh financial start.
Where Does the Word “Bankruptcy” Come From?
Like so many of our words, the term “bankruptcy” is believed to be Latin in origin. Scholars think that the word is a combination of “bancus” (bench) and “ruptus” (broken). A banker who no longer had any money left to lend would symbolically break his bench in public, signifying that he had failed to keep his business running.
The First Bankruptcy Laws
The very first bankruptcy laws were passed in England by Henry VIII in 1542. In these days, being bankrupt was a criminal offense, punishable by incarceration or even death. However, the practice eventually became so acceptable that even sovereign nations were declaring bankruptcy. This occurred in the mid-to-late 1500s, when Spain declared bankruptcy.
A More Forgiving Approach
By the 1700s, England had taken a more forgiving approach to bankrupt individuals. Creditors still needed to be paid, and individuals could not pay their debts if they were incarcerated or dead. As a result, laws were created that forgave debts that could not realistically be paid, as long as debtors agreed to pay whatever they could.
The First Bankruptcy Laws in the United States
The first bankruptcy laws appeared in the United States in the year 1800. However, these laws were continuously repealed until 1989, when The Bankruptcy Act was passed. This law mostly protected companies that were dealing with financial issues, but the Great Depression saw the expansion of these protections to average citizens. The Chandler Act offered further protections to businesses, while the Bankruptcy Reform Act of 1978 is essentially the same system we follow today.
Recent Changes in Bankruptcy Law
Lawmakers in the United States continue to amend and develop existing bankruptcy laws. Among other things, lawmakers have made adjustments to how student loans are handled in the context of bankruptcies.
Enlist the Help of a Qualified Attorney Today
Although bankruptcies are nothing new, many people still approach them with anxiety and confusion. Connect with the Law Offices of Johnson, Sclafani & Moriarty, and you can declare bankruptcy with confidence. With our help, you can put your financial issues behind you and wrap up your bankruptcy as quickly as possible. Reach out and book your consultation today. 413-732-8356
