Bankruptcy Concept

Paper Summary:

This paper discusses the issue of bankruptcy and describes the court process aimed at helping individual consumers and businesses get rid of their debts or to set up a plan to repay them. The paper also provides a history of bankruptcy law and discusses some of the advantages and disadvantages of the law. The paper concludes with 12 myths about filing for bankruptcy.

Outline:
History and Evolution of the Bankruptcy Law
General Concept
The Bankruptcy Code
The Bankruptcy Process
Advantages and Disadvantages, Alternatives
Myths about the Bankruptcy Law

From the Paper:

"The concept of debtor default dates back to the time of the Code of Babylon's King Hammurabi in 1795 BC (ABC Amega 2006). The Code included early laws and rules for settling debts. In cases when the debtor could not repay, the creditor could confiscate his child, wife, slave or the debtor himself into bondage until the obligation was met. In ancient Greece and Rome around 31 BC, indebtedness remained a crime. It was only during the reign of Augustus that a distinction was made between the debtor as a person and his debts. The laws of the time allowed the debtor to choose between giving his property up or himself as repayment (Amega). The history of bankruptcy law consists of three phases (Duhaime 2007). The first phase involved basic debt collection. The Roman Law of the Twelve Tables in 450 BC provided for a method of dealing with debtors who could not repay their debts. Table III provided for a process, which first allowed the debtor to settle his obligation in 30 days or have someone pay for it for him. If the debtor failed, the creditor could bind the debtor with a weight of 15 or more pounds. The creditor could choose to feed him or not with a pound of meal each day. On the third "market" day, the creditor could divide the body of the debtor with other creditors among themselves. Under Roman law, the debtor who could not meet his obligation did not have to be cut into pieces but his creditor could have him imprisoned for life. The creditor also had the option to sell the insolvent debtor, along with his family, to permanent foreign slavery. The concept of imprisonment was adopted by some parts of India and with an added feature. The creditor could take the debtor's wife and, if he did, the act would cancel the debt. Under Charlemagne, the debtor had to surrender his possessions in order to escape or prevent imprisonment. Imprisonment remained an option for the creditor but torture was outlawed (Duhaime)."

Sample of Sources Used:

• ABC Amega. US Bankruptcy Law - Brief History. Credit-to-Cash Advisor: ABC Amega, Inc., 2006
• Bankrate.com. 12 Myths about Bankruptcy. Money Central. MSN Money: Microsoft, 2007
• Consumer Education Center. General Concepts. ABI World: American Bankruptcy Institute, 2007
• Duhaime, Lloyd. Bankruptcy. Duhaime Lawisis: Duhaime Law, 2007. Retrieved September 29, 2007 from http://www.duhaime.org/LegalResources/Bankruptcy.doc
• Empowerment Zone. What You Should Know About Bankruptcy. Citizens Rights Series: Washington Bar Association, 2007. Retrieved on September 29, 2007 from http://www.empowermentzone.com/bankknow.txt

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