History of Bankruptcy
The history of bankruptcy is quite interesting. This practice, in some form, has been around since the time of Moses, though laws have changed slightly since then.
If you look through the Old Testament, you will find that one of Moses’ Laws decreed that a “Holy Year” or “Jubilee Year” must take place every fifty years. During this time, all debts were to be eliminated amongst Jews. Also, all debt-slaves were expected to be let free as part of God’s demand. Throughout Hebrew law, it is easy to find evidence that all debts were forgiven every seven years many decades ago. While it seems as though the history of bankruptcy begins with Moses, it certainly does not end there.
In Ancient Greece, debts were almost always forgiven in one way or another. To the Ancient Greeks, only those males that were born locally could be considered citizens, which meant that the father of any family was responsible for all debts. If a father could not pay a debt, the entire family (wife, children, and servants of the family) had to serve debt-slavery. During debt-slavery, debtors were expected to serve creditors until the losses were forgiven. Since slavery could not last for more than five years, all debts were forgiven, and all debt-slaves were set free, during this time. However, any slaves that once belonged to the debtor’s family were permanently given to the creditors.
As for the word itself, some believe that it is taken from the Latin “bancus ruptus” meaning broken bench. The first banks actually consisted of small wooden tables that were set up in town squares. The people that ran these tables (bankers) tolled money, wrote bills of exchange, and went through most of the banking motions. Once the banker could no longer run their business, the tables were broken in half. Thus, the term “broke the bank” appeared along with the term “bankruptcy.” Though the Greeks and Hebrews tolerated this type of debt, the history of bankruptcy is not so kind if we are to move towards the Far East.
Within the Far East, those that declared bankruptcy more than three times were put to death. If you are considering filing for insolvency, be sure to contact a bankruptcy lawyer. While you may not be put to death for your debts, going about this process on your own can be detrimental.
Throughout the history of bankruptcy, there have been numerous ways to deal with those that do not pay their debts. Luckily, slavery has been abolished, death to debtors has been done away with, and those that cannot pay today can file without any kind of bodily harm.