If you have filed for bankruptcy before in Mankato, MN, or are working through a case now with the help of Behm Law Group Ltd., you know there are many intricacies of the bankruptcy code. Bankruptcy laws weren’t always so complex nor with fairness to all parties involved. Since the first semblances of the bankruptcy code starting in 1542, a lot about bankruptcy has changed.
1542: After centuries of brutality against debtors, the first bankruptcy code was enacted in 1542 in the form of the Statute of Bankrupts. Put into place under the reign of King Henry VIII, the statute was an act of parliament and the first law to deal with bankruptcy. Broadly speaking, the act stated that debtors committing fraud (i.e. not making payments) should have all their assets seized and sold. The value of that sale would then be returned to creditors in amounts proportionate to the debts owed to them. While this form of bankruptcy law was less than fair to debtors, it was the first time something remotely resembling our bankruptcy code today was established.
1570: In 1570, Queen Elizabeth established the first modification to the still-young bankruptcy laws of England. The second of the English Bankruptcy Acts broadened and specified many of the offenses debtors could commit and the punishments therefore. Despite changes and clarifications, this act was still largely unfair to debtors.
1705: Under Queen Anne’s reign in 1705, the first signs of ease to debtors were established. In Queen Anne’s bankruptcy act, debtors had options for discharge and debt relief without the drastic consequences of the past. This departure was considered radical, but since then, every English bankruptcy law included some form of debtor relief provision.
1776: In this auspicious year, the United States of America declared independence from British rule, and the shift in bankruptcy law to what it is today began. To emphasize distance from English law, much of American legislation written in the early years of the United States was based on critical examination of what was wrong with how the parliament and monarchy operated. The lack of favor for the people in the English legislature was exactly the opposite of what the United States was founded on, and to shift away from that, every law was carefully outlined, including the bankruptcy code and the treatment of debtors. At this point, Congress had power to enact general bankruptcy legislation, but the standard for bankruptcy was to have each state establish the insolvency laws it saw fit.
The American shift away from English bankruptcy law was a significant and critical aspect of what our current bankruptcy code is based on. The fine-tuning and improvement on the American shift will be covered in the second part of this blog post. If you are seeking advice on how to file and navigate the bankruptcy code in Mankato, MN, or the surrounding area today, contact Behm Law Group Ltd. at (507) 387-7200 or firstname.lastname@example.org.