History and Purpose of Bankruptcy

We can trace bankruptcy law in the United States all the way back to the 1800s and English law, but bankruptcy law has experienced many changes over the years.  Some of major changes include:

The Bankruptcy Act of 1841:

This was the first time that debtors could voluntarily file for bankruptcy and receive a discharge of their debts.

The Bankruptcy Act of 1898 ("Nelson Act"):

This was the first federal statute involving Bankruptcy that gave companies an option of being protected from creditors.

The Reform Act of 1978 ("The Bankruptcy Code"):

This act still governs bankruptcy law today.

The 2005 Bankruptcy Code Amendments:

These new bankruptcy laws created the means test for Chapter 7 bankruptcy to reduce bankruptcy fraud and abuse.

As bankruptcy law developed/changed over the years the focus or purpose of the law changed as well.  The purpose of modern bankruptcy laws in the United States are to rehabilitate debtors and give them fresh starts.

If you have any questions about bankruptcy please call 1st California Law at (949) 735-8499 for a free attorney consultation.

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