The existence of bankruptcy in the western world is only about 500 years old. And the first bankruptcy laws which were implemented in England long before the U.S. became independent were heavily in favor of creditors. Before our current bankruptcy system, debtors were doomed to be hunted down ruthlessly by creditors who had almost total free reign in what they could do to collect on debts. Under the first bankruptcy laws in England a debtor’s assets could be seized and he could be imprisoned. Many debtors had to flee their homes and communities to escape creditors and basically live an underground existence. And many of the creditors were not “above board” with their accounting methods, sometimes tacking on excessive fees, interest and penalties to past-due debts making it impossible to repay. Sound familiar? The old-time creditors sound like our modern creditors; but the difference is that now we have some of the most powerful and effective bankruptcy laws on the planet and most recently, some of the most powerful debtor protection laws. But in those days, because the creditor ruled, there were often very few remedies for debtors who could not repay their debts. The most vulnerable debtors, the poor, sick and elderly were hurt most by the lack of fair bankruptcy laws. Many people committed suicide to avoid the misery and pain associated with being in debt with no way out. This is why it’s not only puzzling; but irritating and annoying that anyone would deride our fair bankruptcy system as some type of “escape hatch” for those who want to avoid financial responsibility. Don’t we all have a responsibility to make sure that the most vulnerable of us are not mired in debt for the rest of their lives? That’s what bankruptcy does, it protects the most vulnerable amongst us and even the most powerful.
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