Bankruptcy has quite a history. The word “bankrupt” is thought to have come from two Latin words – “bancus” meaning table or bench; and “ruptus” meaning broken. In the early 1800′s, merchants would sell their goods by coming to markets and setting up a table or bench displaying their goods. When they were unable to stay in business due to finances, the bench or table would be broken to symbolize they were no longer in business.
No Debtor’s Prison
Unlike some other countries, the United States does not have a debtor’s prison. Debtors’ prisons have been banned in the U.S. since 1833 and the US Supreme Court has ruled they are unconstitutional. People do not go to jail for not paying their debts (except child support) unless some type of fraud or crime was committed. You can go to jail if you have given a lender false information to obtain a loan; or if you write a bad check. Another way to end up being arrested is failure to appear in Court if you are ordered to do so.
There Is Nothing New Under the Sun
In colonial times, indentured servitude was common. History shows that many settlers arrived as indentured servants and contracted to work as a servant for a set number of years, typically seven to eight. After their time was complete, the master would set the servant free. At first, the servants were usually given 50 acres of land, some basic farming implements, and this was a great way to make the jump from servant to landowner. This changed somewhat later though as greedy masters made it more difficult for servants to gain their freedom, and gave less incentive at the completion of their service. While we no longer have indentured servitude, the debt level that people are working to support can be a form of servitude.
The Year of Jubilee
In Old Testament times, indentured slaves would serve for a set period, usually one year, and then be set free. Poor people would sell themselves, their wives, and children into slavery in order to survive. They would often sell their land as well. The Torah (the first five books of the Bible) required though that redemption (purchasing back for the debt price) be permitted. Land was often sold for payment of debt, however, the Torah required that it be returned to the original owner or his heirs after fifty years — the Year of Jubilee. This land applied to farmland, or at least land not located within a walled city.
Essentially, if a person sold their farmland, it was like leasing it for fifty years, and both parties knew that it would return to the original owner in the Jubilee year. The price was set and paid according to how many years to the Jubilee Year. Putting this into perspective, however, a generation at that time was forty years, so it was indeed possible to lose your land for a lifetime. But your children’s inheritance would be protected. This law also served to keep great wealth from being amassed by a single person.
Biblical References to Debt
The Bible contains many scriptures dealing with money. Specifically, on debt, verses warn against debt bondage, predatory lending, and mistreating debtors. Yet there are also admonitions about the importance of paying back what is owed. When considering bankruptcy, each person’s conscience must guide them in the right way to proceed. Consulting a minister or spiritually wise friend may help.
We hope you enjoyed our brief history of bankruptcy.