Attitudes toward bankruptcy have changed over time | Reed Law Firm, P.A.

Attitudes toward bankruptcy have changed over time

On Behalf of | Feb 9, 2022 | Bankruptcy |

A lot of people in Florence who are struggling with debt and might benefit from Chapter 7 or Chapter 13 bankruptcy hesitate. They are afraid of being stigmatized for filing for bankruptcy. There is still a sense that bankruptcy is the “easy way out” or that people will view them negatively.

The fact is, personal bankruptcy is a legal process that is nothing to be ashamed of. Hundreds of thousands of Americans file every year. But it was not always this way in this country.

The history of bankruptcy in the U.S.

The U.S. did not have a permanent system for bankruptcy until 1898. Before that, Congress occasionally passed temporary laws allowing individuals and businesses to declare bankruptcy, but debtors’ ability to do so was very limited. For the first time in 1898, you could file without your creditors’ consent, giving debtors much more control over the process. Congress reformed the bankruptcy system in 1978, which forms the basis of the modern process.

Before bankruptcy, debtors’ prison

The concept of bankruptcy to discharge debt the person cannot pay is relatively new. In Britain, it was not that long ago that you could have been put in debtors’ prison if you could not pay a debt. In modern times, we have abandoned the idea that owing more than you can afford is a crime. Our society now understands that debt can become unmanageable. Rather than punish the debtor, it is better for everyone involved to find a solution that gets them out of debt.

If you and your family are struggling with debt, bankruptcy could be a tool for putting this problem behind you. Don’t let unfair stereotypes hold you back from pursuing all your options.

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