Tap to Call - (877) 250-8242

History of Bankruptcy Laws

The history of bankruptcy laws offers a glimpse into the changing social norms that created today's stigma-free process through which people may eliminate their debts.

Bankruptcy laws originated in England hundreds of years ago, and were eventually exported into American courts.

In fact, with an eye towards English bankruptcy laws, the United States Constitution gave the legislature express power to enact "uniform laws on the subject of bankruptcies." This power was first used by Congress in 1800.

U.S. Bankruptcy Laws: A Brief History

In 1800, Congress passed the first American bankruptcy law, which closely mirrored old English rules governing debt relief. Since then, however, bankruptcy laws have changed a great deal.

Some of the most important changes in bankruptcy laws have included:

  • Bankruptcy Act of 1841. This marked the first time debtors were able to voluntarily file for bankruptcy and receive a discharge of their debts. Before this Act, creditors held the keys to bankruptcy. Sources suggest that this law created the first "modern" form of bankruptcy.
  • Bankruptcy Act of 1867. While this was later repealed, it did create state exemptions to federal bankruptcy cases, allowing debtors to keep valuable property out of the hands of creditors during and after bankruptcy.
  • Reform Act of 1978. This Act, also known as the Bankruptcy Code, still governs bankruptcy law today. A key part of this Act was the strengthening of Chapter 13 bankruptcy, which is designed to help wage earners repay and discharge their debts.
  • 2005 Bankruptcy Code Amendments. These new bankruptcy laws created the means test for Chapter 7 bankruptcy, which limits Chapter 7 to people with limited income. The new laws were also intended to reduce bankruptcy fraud and abuse.

While bankruptcy laws have been amended numerous times in our country's history, their primary purpose has never wavered. These laws are intended to help hard-working people eliminate some or all of their debts, allowing them to restart their financial lives.

Take Advantage of Bankruptcy Laws

While bankruptcy laws have a long and storied history, they remain more relevant today than they have ever been before. For example, through Chapter 7 bankruptcy, a filer may be able to eliminate:

In addition, Chapter 13 bankruptcy provides debt relief for people who have steady employment. By filing for Chapter 13, filers may be able to stop home foreclosure or prevent their car from being repossessed.

To learn more about the bankruptcy process, contact a local bankruptcy lawyer today. You may also fill out the brief form below to connect with a lawyer in your area for a free consultation.


Tap to Call - (877) 250-8242

PAID ATTORNEY ADVERTISEMENT: THIS WEB SITE IS A GROUP ADVERTISEMENT AND THE PARTICIPATING ATTORNEYS ARE INCLUDED BECAUSE THEY PAY AN ADVERTISING FEE. It is not a lawyer referral service or prepaid legal services plan. Total Bankruptcy is not a law firm. Your request for contact will be forwarded to the local lawyer who has paid to advertise in the ZIP code you provide. Total Bankruptcy does not endorse or recommend any lawyer or law firm who participates in the network nor does it analyze a person's legal situation when determining which participating lawyers receive a person's inquiry. It does not make any representation and has not made any judgment as to the qualifications, expertise or credentials of any participating lawyer. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. The information contained herein is not legal advice. Any information you submit to Total Bankruptcy does not create an attorney-client relationship and may not be protected by attorney-client privilege. Do not use the form to submit confidential, time-sensitive, or privileged information. All photos are of models and do not depict clients. All case evaluations are performed by participating attorneys. An attorney responsible for the content of this Site is Kevin W. Chern, Esq., licensed in Illinois with offices at 25 East Washington, Suite 400, Chicago, Illinois 60602. To see the attorney in your area who is responsible for this advertisement, please click here, or call 866-200-8052.

FLORIDA ONLY: Total Bankruptcy is considered a lawyer referral service in the state of Florida under the Florida Rules of Professional Conduct. By all other standards, Total Bankruptcy is a group advertisement and not a lawyer referral service.

If you live in Mississippi, Missouri, New York or Wyoming, please click here for additional information.

By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.