The existence of money has always come with some form of bankruptcy. Early American colonies inherited a system of bankruptcy from Great Britain. This system sought to protect the rights of creditors by allowing them to throw a debtor into a special prison just for debtors. Great Britain’s system was advanced compared with some older systems of dealing with overburdened debtors. For example, Roman law called for the execution of “bankrupt” debtors. Early Italian states allowed creditors to enter a debtor’s home, take and sell everything to recover on loan defaults. Most early systems emphasized the protection of creditor’s rights to collect on debts. Creditors were the ones that declared the bankruptcy of their debtor victims – bankruptcy was a tool of creditors. There are some examples of early systems that were more favorable to overburdened debtors. For instance, going way back, the Old and New Testaments suggest that creditors forgive their debtors every seven years.
However, early on, American colonies followed Great Britain’s example and created debtor’s prisons. In fact, Robert Morris, a signer of the Declaration of Independence, spent about 3 years of his life in debtor’s prison. Fortunately, following the Revolution the idea of “debtor’s relief” began to gain traction. The American Civil War and the destitution left in its wake prompted even more equitable bankruptcy legislation. Eventually, federal bankruptcy law in the United States allowed for a debtor who had fallen on hard times to gain some kind of relief – to start over again. Finally, bankruptcy was becoming a protection rather than a terror to debtors.
The latest big reform of American bankruptcy law occurred in 2005. Under current federal and Utah bankruptcy law, debtors can initiate bankruptcy proceedings to gain relief from their creditors. Most individual debtors will file either a Chapter 7 or a Chapter 13 bankruptcy. Federal and Utah bankruptcy law provide a way for those who have fallen on hard times to have a fresh start. Call Justin Myers, a Utah bankruptcy attorney today for a free consultation or order his free book entitled Filing Bankruptcy in Utah.