An Introduciton to Bankruptcy
Bankruptcy is not a modern concept but the way we deal with it has changed quite drastically and it's become a little more complicated. When the ancient Egyptians hammered metal shards into rings to use as currency in 2500 B.C., there is no way they could have anticipated the future implications of this invention. In ancient Rome, when a tradesman found himself in debt and could not pay, his creditors were allowed to smash his trading counter. The situation was called a 'bancus ruptus', Latin for 'broken bench'. Today, we call it bankruptcy.
Predictably, anyone filing bankruptcy today has a million questions bumping through his or her brain - how do I begin to file bankruptcy? I've heard of Chapter 7, what is it and can I apply? What's the deal with lawyers, forms and court costs? Will I ever be able to use a credit card again? Here, you'll find answers to all these questions and more.
Don't worry, though; bankruptcy has evolved quite a bit from its rather messy and sometimes brutal origins.
If you went bankrupt in 17th century England, you were considered a criminal and often handed a death sentence or even worse, incarceration in debtors' prison. Colonial America took its cue from England and locked debtors up.
Is there life after bankruptcy?
Twenty-first century law considers the matter of bankruptcy one to be fought out in court, with debtors and creditors bearing arms of paperwork and legal red tape. And while bankruptcy may be a financial and mental nightmare, your creditors are not allowed to harm you and that is certainly a step forward.
One who is bankrupt is defined by Merriam-Webster's Dictionary as "a person judicially declared subject to having his estate administered under the bankrupt laws for the benefit of his creditors." In other words, bankruptcy tries to satisfy both the creditor and the debtor by paying the bills due to one and clearing the debt of the other.
The largest bankruptcy case in American history was the the 2008 filing by Lehman Brothers. The company found itself in serious financial trouble and filed for bankruptcy with $639 billion in assets, $613 billion in bank debt and $155 billion in bond debt.