What are the origins of bankruptcy, not just in the United States, but in the world? How far back does bankruptcy date? The Rashid Law Firm, a law firm that is dedicated to practicing exclusively bankruptcy, explains as follows:
The first place we look at is Ancient Greece, which was a civilization that existed between the 8th and 6th century BC to 600 AD. Why Ancient Greece? Ancient Greece is the first period where we have scientific proof of attested history, and not just circumstantial accounts. Ancient Greece also includes a time period considered the very first foundation of modern western culture. Did bankruptcy exist in Ancient Greece? No, it did not. If you owed a debt in Ancient Greece and could not repay the debt, you and your family could be sold as debt slaves.
In Ancient Greece, slavery was very common, as it was in other places during that time period as well. It is estimated that the majority of the people of Athens in Ancient Greece actually owned at least 1 slave.
Sold to work until the debt was considered paid off. What is interesting is that as brutal as this sounds, there was a limit on being a debt slave to 5 years. Meaning you could not be a debt slave for longer than 5 years. In our current bankruptcy in the USA, in the year 2015, there is also a very important 5 year limit. (This was before COVID happen). A person cannot be in a chapter 13 bankruptcy payment plan for longer than 5 years. In addition, debt slaves in Ancient Greece were treated differently than other slaves. The laws in Ancient Greece guaranteed the protection of debt slaves lives, they were not permitted to be injured either. This was not the same for other slaves. Therefore, debt slaves were legally protected from physical abuse from their temporary owners.
What about the property that the now enslaved debtor in Ancient Greece owned? As we mentioned earlier, the majority of people in Athens had at least 1 slave. If a debt slave owned a slave before the debt slave became a debt slave, the new owner of the debt slave would also be legally entitled to now own the slave of the debt slave, and this was a permanent ownership, not a 5-year ownership. So in addition to the debt slave being enslaved for 5 years for not being able to pay his or her debt, he/she would also have to transfer full ownership of his/her slaves to the creditor as well.
There were, of course, exceptions. In Athens, you could not become a slave simply for owing debt as you could in the rest of Ancient Greece. This meant that most debt slaves that were in Athens were foreigners because they were not protected from this law.
Here we are today, in the year 2021 AD, in the United States of America, one of the most developed countries in the world today, and our laws are now of course very different from the laws we had in 8th Century BC. If you would like to know about the creditor and debtor legal relationships in the USA, the first place to look is at our bankruptcy laws. Our bankruptcy laws are largely uniform throughout the country because bankruptcy is a federal, not state, law. If you are interested in filing bankruptcy, and would like a fresh start or a payment plan, and you live in or around the Houston area, contact us for a free consultation with a bankruptcy lawyer at the Rashid Law Firm at 832-209-8833.