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Who invented bankruptcy?

Origin utah bankruptcy
Bankruptcy Law

So who invented bankruptcy? Bankruptcy is in the news right now as many retail business and families are struggling in the current economy. Here in Utah the number of cases filed each month is on the rise. Here is brief overview of the origin of bankruptcy according to Chapter 7-11.com.

“It may surprise you to learn that many believe God to have been the inventor of bankruptcy. History shows that the first written regulation of bankruptcy is found in the Bible, located in the book of Deuteronomy. Chapter 15, verses 1-2 read: “At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the Lord’s release.” Prior to this time, debtors were treated with extreme harshness and cruelty. Roman law decreed that debtors could be imprisoned, exiled, enslaved, or even executed. 


As time wore on, debtors began to be protected from physical harm in consequence of their inability to repay what they had borrowed. However, debtor’s prisons were common and under such conditions the economy as well as the debtors suffered. The system was completely illogical–not the mention brutal–as it prevented debtors from even having the opportunity to earn an income and repay their debts. Instead, they had to wait until a friend or relative could gather the funds to pay their creditors, or if they didn’t have friends or relatives who could help them, they would simply live out the rest of their days imprisoned and unable to contribute at all to society. Thus the purpose of the law given to the Jews in the Old Testament was to provide a way in which debtors would be obligated to pay back their loans, but if they had not yet repaid them by the end of seven years, creditors were commanded to release them from their debts as a form of generosity. 

To underscore God’s demands for munificence, the scripture [in verse 9 of Deuteronomy 15] also provides that when the potential creditor was asked to lend money to the poor, he was forbidden to consider the fact that his debtor might soon be released from his obligation to repay because the seventh year was approaching! Indeed, the creditor was chastened if he withheld his bounty from a poor debtor even if he knew that he would never get it back …. There was a stark contrast between God’s approach and the early laws of the Romans and the English. The approach in the Bible was precisely the opposite of the world view prevailing at the time.

Of course the approach in the Bible is also different from the bankruptcy system established in the United States today, but certainly the Bible has influenced our laws to have a little more mercy on debtors and make it possible for them to come to a point in time when they are freed of debt.” (Source: http://www.chapter7-11.com/origin%20of%20bankruptcy.html )

Who invented bankruptcy? So if you are wondering if bankruptcy is a good option in Utah give us a call we would be happy to discuss your case and help you make an informed decision.

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