This website does not provide legal advice.  It is for informational purposes only. Please do not act or refrain from acting based on anything you read on this site. The information contained in this web site, article or link may be outdated, incorrect or not applicable; it is your obligation to confirm the accuracy. Using this site or communicating with Law Office of D.L. Drain, or any agent/employee of our firm, through this site does not form an attorney/client relationship. This site is legal advertising. Please review the full disclaimer for more information.

It is very important that you obtain legal advice from an experienced attorney regarding your particular situation. Consultation before you take action will certainly cost you less than it will cost to fix your unintentional errors.


We are not the first to face this economic problem, nor will we be the last.

Even some of the founding fathers didn’t think much of financial institutions. Thomas Jefferson called banks “more dangerous than standing armies.”

Bankruptcy is specifically authorized in United States Constitution, Art. 1, Section 8 (4).

Bankruptcy laws are very powerful and they are all encompassing. Bankruptcy affects people and small companies in many ways. Other laws must bow to the bankruptcy laws. A divorce, a lawsuit and a foreclosure of property are all put on hold until, and only if, the bankruptcy is no longer in force, or the Bankruptcy Court gives those creditors permission to continue with their actions.

April 4, 1800, Congress passes the Bankruptcy Act of 1800 in order to gain the release of certain power men from debtors’ prison.

The reason for the new bankruptcy laws was so that Robert Morris, and others like him, can be declared bankrupt and released from debtors’ prison, where they are being held under state laws.

Morris’s biographer explains it all like this. “In the spring of 1800, spurred by the string of failures that swept the country—Morris’s being perhaps the largest—Congress passed the nation’s first bankruptcy law.  Designed to limit fraud and equalize competing claims, it allowed for the release of major debtors upon the petition of their creditors.”

“In Morris’s case, as might be expected, the negotiations were protracted, but on August 26, 1801, he walked once more through the gates of the Prune Street Jail.”

Morris writes: “I obtained my liberty last evening, and had the inexpressible satisfaction to find myself again restored to my home and family.”

“He’d been released from prison, but not from his debts.  The next three months Morris spent in hearings before a panel of bankruptcy commissioners appointed to manage the claims of more than ninety creditors.”

Morris’s contributions to America’s founding and his “indelible impact on the life of its people.  His secret agents had supplied the armies of the Revolution, his credit had salvaged its finances, and his faction had fashioned its Constitution.”

“More than that, Morris installed his pragmatic, realist, modernist vision of a free people united by the principles of economic self-interest and not by bonds of state or political authority.”

bankruptcy history

Thousands of years before the birth of Christ excessive charging of interest had been denounced. In the ancient world writers, philosophers, and political figures all noted its harm to society and the individual.

Aristotle called the birth of money from money “unnatural.”

Julius Caesar capped the interest of loaning money at 12 percent and Justinian dropped it to 8 percent.

Andrew Jackson, told a delegation of bankers that they were a den of vipers and thieves.”

Can you now see how the very economy of our country would be directly affected if we were not protected by these well founded principals of bankruptcy?

Perhaps this helps you understand how important bankruptcy is to our daily personal, professional and social lives. Every one of us would be directly affected if the bankruptcy laws did not exist.

Therefore, the next time someone mentions the word “bankruptcy,” don’t be so quick to form a negative opinion and assume “failure” goes hand-in-hand with bankruptcy.

People are in pain.  The need to consider bankruptcy is not be as easy to see as a broken back or leg, but it is very real and extremely painful.  It actually takes more time, energy and will power to put yourself under the close scrutiny of the bankruptcy process than it takes to close the business or go underground.

Think of it as an area of law that holds our lives together, and keeps us functioning as a growing and healthy economy. Give bankruptcy law the credit it deserves.  It allows people and businesses to start over.  To pay their taxes, buy food and other necessities, or allows them to pay their employees so they can buy food and other necessities.

All of this and more it why I wake every morning excited that I can help both debtors and creditors understand bankruptcy.

Diane Drain


So many of my clients feel embarrassed and self-conscious about the possibility of filing for bankruptcy.

I remind them that the Bible encourages forgiving debts and that this principle is the foundation for our bankruptcy laws. The theory of consumer protection has been around since the time of Moses –

• Do not mistreat any widows or orphans.
• If you lend money to a poor person, do not charge any interest.
• Do not mistreat any foreigners among you.
• Leave part of your harvest in the fields for the poor to glean.
• Do not spread false rumors.
• Do not give false testimony in court.
• Make no false accusations.
• Do not accept bribes.
• If you take a poor man’s cloak as surety for a loan, give it back to him when he needs it to keep warm.
• If your enemy’s animal is running loose, return it safely to him.

Leviticus – “If a fellow Israelite living near you becomes poor and cannot support himself, charge no interest on any money you lend him and take no profit on any food you sell him.

Article: Does God Want You To Be Bankrupt?

The first recorded bankruptcy law:


• In Ancient Greece, bankruptcy did not exist. If a man owed and he could not pay, he and his wife, children or servants were forced into “debt slavery”, until the creditor recouped losses via their physical labor.
• In the Torah, or Old Testament, every seventh year is a Sabbatical year wherein the release of all debts that are owed by members of the community is mandated, but not of “foreigners”. But every 49th year, the Year of Jubilee, the release of all debts is mandated, for fellow community members and foreigners alike, and the release of all debt-slaves is also mandated. The Year of Jubilee is announced by the blowing of trumpets throughout the land of Israel.
• In Islamic teaching, according to the Quran, an insolvent person was deemed to be allowed time to be able to pay out his debt. “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.”
• Philip II of Spain had to declare four state bankruptcies in 1557, 1560, 1575 and 1596. Spain became the first sovereign nation in history to declare bankruptcy.
• In England, The first recognized piece of bankruptcy legislation was the Bankruptcy Act 1542. Bankrupts were seen as crooks, and the Act stated its aim to prevent “crafty debtors” escaping the realm.
• In the United States: bankruptcy is specifically authorized in United States Constitution, Art. 1, Section 8 (4)

“Jesus Christ didn’t suffer the greedy well. “And He found in the temple those who sold oxen and sheep and doves, and the money changers doing business. When He had made a whip of cords, He drove them all out of the temple, with the sheep and the oxen, and poured out the changers’ money and overturned the tables.”

John 2:14-15



Jewish law provides for cancellation of the debts of brethren every 7 years (Deut. 15: 1-2, NIV) and, on the 50th year (jubilee) “shall proclaim liberty throughout the land, too all its inhabitants” (Lev. 25:10, NIV). The Jewish lawmakers knew that keeping people under heavy debt forever would only hurt their overall economy. As a result of these basic principals their economy stayed healthy and continued to grow.

“If your debtor be in straits, grant him a delay until he can discharge his debts; but if you waive the sum as alms it will be better for you, if you but knew it. Believers, have fear of God and waive what is still due to you from usury, if your faith be true; or war shall be declared against you by God and His apostle. If you repent, you may retain your principle, suffering no loss and causing loss to none.”

The Koran 2:276.

Biblical warnings against usury (an immoral charging of interest) are ignored.

The Commandments brought by Moses regarding greed have been broken by these creditors. Today, credit card companies are allowed to engage in legalized loan sharking. Shockingly, Christian leaders are silent, passive, and apathetic when it comes to working men and women in contemporary society who are crushed by usurious interest rates. Christians in general seem complacent about their own victimization. It is difficult not to see how charging 18 percent or more is anything other than greed.

There are numerable Biblical references regarding the evils of greed (Proverbs 30:15, 1:19; Luke 11:39; 1 Timothy 6:10, 3:3, 6:10).

Scripture teaches that we are stewards of God’s wealth. Hence it would be a sin to misuse, squander, or misappropriate it. This is not to suggest that interest isn’t a legitimate charge. The excessive charging of interest, however, is usury –which is a form of theft (Proverbs 11:26; 1Timothy 6:17; Luke 19:46; Matthew 21:10-17). This sin created excessive consumerism that gave birth to a false god in violation of the First Commandment.*

God gave us this wisdom in the Bible: “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.” (Romans, Chapter 13, Verse 8.)

Bishop Paul Peter Jesep

“If credit card representatives told Jesus he had to pay 18 percent interest or more, he may have taken a whip of chords to show his disapproval. Bishop Jesep

Because Jesus is not here in person to take action, it’s time Christian leaders use their political clout to drive out today’s moneychangers from the homes of families.” Catholic Reflections & Reports.

By Diane L. Drain, attorney and counselor at law. *I want to thank Bishop Paul Peter Jesep, Ukrainian Autocephalous Orthodox Church – Sobornopravna of Europe and the Americas for his help on the theological history of usury and credit. His Grace is based in New England. He may be reached at [email protected]