How did Bankruptcy get created?

[6ftladycop]

I was curious about how bankruptcy came to be. I am glad that I was able to use it to help myself, but I have a suspicious nature and there has to be more to it than meets the eye. Somebody has got to be getting kickbacks from allowing us poor folks the opportunity to file bankruptcy and erase debt. I know they are not doing it out of the goodness of their heart. Does anybody have information on this?

[rrockinggramma]

I am sure someone else (history background) will repond but I believe it started in the Biblical times where an individual was given the chance to start fresh every 7 years. I think that is where a lot of the 7 year stuff comes from. But then I could be wrong. . .

[6ftladycop]

Hey....not bad....more than I knew about, but it makes sense.

[joab]

The concept has been around in various forms for thousands of years, but the term "bankruptcy" derives from the medieval Italian practice of "banca rotta": when a merchant couldn't pay his debts, his creditors would confiscate his assets and break his trading bench to symbolize that he was out of business. "Banca rotta" literally meant "broken bench".

Things have come a long way since then.

[Cassiopeia]

I am sure someone else (history background) will repond but I believe it started in the Biblical times where an individual was given the chance to start fresh every 7 years. I think that is where a lot of the 7 year stuff comes from. But then I could be wrong. . .

There were some posts about that not too long ago.....truly fascinating stuff!!!!! You are correct. I'd do a search but I'm too lazy.

[Boscoe]

In the real old days, they used to have "debtor's jails", where people who could not pay their bills would go to jail. Really.

It evolved many times over the years, and the whole concept is that honest individuals sometimes have event happen in their lives which are outside of their control. In a civilized society like this one, it was thought that citizens should have an option to obtain a "fresh start" to discharge their debts that have become an overwhelming burden.

The concept to "exempt" assets is to allow the debtor to have a true "fresh start" by allowing him or her a certain amount of assets to truly start over. Having gone through this bk process last summer and fall, my opinion is that the exemptions (federal or state, whichever is allowed by your state) are very fair, some states more than others.

We were able to keep our house, both cars, all personal and household belongings and almost $20k in cash and stocks with the federal exemptions we were allowed. Also, my pension, our 401(k) and life insurance proceeds were all 100% exempt. We had to pay back some cash, but given all we were able to keep, we could not complain.

The real key is to understand as much as possible (this forum helps a great deal) and to have a first rate attorney. That alone helped get us through this so fast.

[chpxiii]

Wikipedia to the rescue:

http://en.wikipedia.org/wiki/Bankruptcy

It addresses how the word "bankruptcy" came about and it talks about the forgiveness of debt every seven years with the Jewish people - which is what you were asking about 6ftladycop. There's more in the wikipedia.com article.

[JollyGG]

Plus alot of our economy is based on consumer spending. If consumers income is all tied up in debt payments they aren't buying products and thereby supporting the economy. Additionally our economy is damaged by poverty in higher social costs (welfare ect., prisons, crime, etc.). Giving people an "out" should increase standards of living and reduce social costs.