In the United States of America, the American Bankruptcy System has evolved to the system it is today after being placed under federal jurisdiction by the United States Constitution. In Article 1, Section 8, Clause 4, the Constitution allowed Congress to enact “uniform laws on the subject of bankruptcies throughout the United States.” Had the Founding Fathers not seen the wisdom of including bankruptcies in the every day affairs of federal legislation, there would be only two possible alternatives to the American Bankruptcy System today- civilized or uncivilized.
Understanding the Historical Response to Bankruptcy
The word “bankruptcy” derived from the Italian root words of “banca rotta,” which literally translates into English as meaning “broken bench.” This concept may have evolved as a figure of speech from the breaking of a money changer’s bench or counter to signify the money changer’s insolvency.
However the word evolved, bankruptcy has become associated with being insolvent to the point an individual can no longer pay back what he or she owes a creditor. As a result, creditors throughout mankind’s history have sought recourse from their collection problem in only two ways. Creditors historically have either responded civilly or uncivilly to the collection of their debts.
In uncivilized societies, debt collection could be brutal in its conclusion. Even in a civilized society where laws are broken, debt collection can still be a brutal practice. In most civilized societies, the only two possible civilized responses to debtors has historically been to respond to the debt through legal retribution or the legal forgiveness of the debts. Debtor’s prisons have historically been the legal response of many civilized societies in the form of retribution, but they have also in many cases proven to be brutal responses. As a result of such pass brutality, the American Bankruptcy System has evolved.
Understanding the History of the American Bankruptcy System
In early America before the evolution of the American Bankruptcy System, many states practiced a form of legal retribution in dealing with debtors, and they were often brutal. That meant many debtors were placed into jail or publicly shamed or punished in some way for not paying their debts. Those debts included almost any type of debt owed a creditor.
Today however, the American Bankruptcy System has evolved to the point where our civilized society practices a more forgiving type of system. For the most part, it is not a crime to owe money, or at least in most cases, not a crime that will land you in jail. Instead, the American Bankruptcy System allows a debtor under bankruptcy laws to seek legal ways to be completely forgiven for certain debts or to pay back the debts they can under financial reorganization plans.
Unfortunately in America today, there are still certain debts that might land you into a debtor’s prison. Debtors who owe child support and certain criminal debts can be prosecuted for the inability to pay those debts, and you can spend jail time for not being able to or willing to pay the debts.
There are still two possible Alternatives within the American Bankruptcy System. We can be civilized or uncivilized in how we treat one another.
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