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 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 A divorce, a lawsuit and a foreclosure of property are all put on hold until, and only if, the bankruptcy is no longer in force, or the Bankruptcy Court gives those creditors permission to continue with their actions.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.”
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.