The history of bankruptcy goes back thousands of years. During the Old Testament, writings attest to the fact that many people struggled with money. Individuals became indentured servants to pay off their debt and money often went to the creditor before the family could meet their basic necessities. The social system of that time allowed children and grandchildren to inherit their parent’s debt and without relief, they were faced with owing money for the rest of their life until Jewish law provided a system of bankruptcy. The law stated that for six years, the debtor had an obligation to do everything in their power to pay their creditors. On the seventh year, known as the Year of Jubilee, creditors were required to forgive any unpaid amount for fellow community members and foreigners alike. The Year of Jubilee was announced in advance on the Day of Atonement, or the tenth day of the seventh Biblical month by the blowing of trumpets throughout the land of Israel. People still had to deal with unfair creditors cruelly attempting to retrieve their money before the Year of Jubilee however, but at least people in debt had a chance to regain their financial freedom. In Islamic teaching, according to the Qur’an, an insolvent person was deemed to be allowed time to be able to pay out his debt. This is recorded in the Qur’an’s second chapter (Sura Al-Baqara), Verse 280, which notes: “And if someone is in hardship, then let there be postponement until a time of ease. But if you give from your right as charity, then it is better for you, if you only knew.”
In ancient Greece, the notion of debt forgiveness was unknown. If a person owed money, his entire family (including servants) were forced into “debt slavery” until they could work off their debt with physical labor. Many states in ancient Greece limited debt slavery to a period of five years and debt slaves had protection of life and limb, although regular slaves did not. The creditor could retain servants of the debtor beyond the five-year deadline and they were often forced to serve their new lord for a lifetime. Debt slaves were not protected from bodily harm and their treatment was extremely harsh.
Modern bankruptcy law has been created based on numerous historical traditions. In ancient Roman law, an unpaid judgment creditor could have his debtor’s estate sequestered (missio in bona) and sold for the benefit of all creditors (venditio bonorum). Since proceedings of this type caused a loss of civil rights, to alleviate this hardship, a debtor was given the privilege of voluntarily relinquishing his assets to his creditors by petitioning a magistrate (cessio bonorum). During the middle Ages, institutions underwent a transformation. The Medieval Italian cities enacted statutes dealing with the collection and distribution of the assets of debtors, especially merchants, who had absconded or fraudulently caused insolvency. Such bankrupts (rumpentes et falliti) were subjected to severe penalties, and their estates were liquidated. In addition, Medieval Spanish law restored the judicial cessio bonorum. The Siete Partidas, a codification published by authority of Don Alfonso X the King of Castile and León, contained detailed provisions regarding insolvent debtors. Applicable to merchants and non-merchants alike, this publication enabled them to secure a voluntary liquidation of their assets under judicial supervision and an unpaid creditor could insist on either payment or assignment of his estate by the debtor to all creditors. Laws dealing with the property of absconding and fraudulent debtors, modeled after the statutes of the medieval Italian cities, spread throughout Western Europe. Provisions of this type were adopted in the commercial centers of France, Brabant, and Flanders during the 15th and 16th centuries. The customs of Antwerp printed in 1582, contained comprehensive rules on the treatment of bankrupts and their estates. The emperor Charles V, as count of Flanders, inserted stringent provisions for the repression of bankruptcies in his Decree for the Administration of Justice and Good Order of 1531.
In England, under Henry VIII, the first official laws concerning bankruptcy were passed in 1542. The Statute of Bankrupts was the first statute under English law dealing with bankruptcy or insolvency. At that time, a bankrupt individual was considered a criminal and as such, they were subjected to criminal punishment ranging from incarceration in debtors’ prison to the extreme sentence of death. There is no doubt that the first English “acte againste suche persones as doo make Bankrupte,” passed in 1542 was inspired by the northern European models, as the title reflects the Flemish expression. It governed proceedings instituted against absconding debtors and was replaced by a more detailed act of 1571 that applied only to merchants and other traders. Voluntary proceedings were not provided in England until 1844 and not in the United States until 1841. The Sixteenth Century saw Spain’s Phillip II declare four separate state bankruptcies in the years between 1557 and 1596. Because of this, Spain officially became the first sovereign nation to declare bankruptcy. Besides Spain, the failure of a nation to meet their bond repayments was seen on many occasions prior to 1800 including France, Portugal, Prussia, Egypt, Russia, Turkey, and the early Italian city-states.
If unpaid debts have taken over your life, in this troubled economy you are not alone as people from all walks of life and socioeconomic status are realizing they too need help. Whether a result of poor financial decisions, job loss, or circumstances that have ensued beyond your control, you can legally claim Chapter 7, 11, or 13 bankruptcies to secure relief from your creditors. Fortunately, today you no longer have to be harassed by debt collectors as laws now govern how creditors can ask for payment and if they break the rules, you have legal recourse.
Bankruptcy Attorney Robert H. Pflueger at Orlando Bankruptcy Law Firm offers you numerous options to resolve your debt and you should not feel embarrassed, as there are very few situations he has not encountered. With over 30 years of experience, Robert Pflueger is one of the most qualified bankruptcy attorneys in the country and he has built his law firm by maintaining a commitment to specialized legal advice, extraordinary customer service, the ability to empathize and listen, along with competitive and fair legal fees. There are many types of bankruptcies for personal or business debt, depending on the level of your need, and by utilizing his professional services; you will ensure the best outcome for you. Bankruptcy no longer means you will end up destitute or that you are a bad person so by seeking Robert Pflueger’s services, you will never face your bankruptcy alone. At Orlando Bankruptcy Law Firm, we understand that financial challenges date back to Biblical times and our goal is to help you receive your right to a fresh start so call today and schedule your consultation.