Bankruptcy

1889 Words4 Pages

Over the years, the process of declaring bankruptcy has become incredibly simple. Because of this change, the number of people declaring bankruptcy is at an all time high. Today, bankruptcy is a common thing among companies and individuals alike. The American bankruptcy law allows people to avoid paying their debts by offering the debtors a discharge without a harsh consequence. By not having repercussions for their actions, bankruptcy filers often plan future bankruptcies, allowing them to steal even more money from creditors with no punishment. There are 13 different chapters in the bankruptcy system with the principal chapters being 7,11, and 13. You can only file for bankruptcy under these three chapters, the others are there to explain how the system works. Under Chapter 7, a person’s debts are wiped away while under chapters 11 and 13, debts are frozen while the debtor figures out a way to repay them. The people filing Chapter 7 are stealing money from creditors who are trying to help them. It is one’s moral duty to pay back his debts and one should be disgraced and embarrassed if they borrowed money they cannot pay back. Over 1,400,000 people filed for bankruptcy in 1998 under Chapter 7, Chapter 11, and Chapter 13. 75% of them were under Chapter 7, leaving “retailers, bankers, and credit-card companies” with $40 billion in unpaid debts (Kopecki 5) (Pomykala 16). The use of different reforms could cut down on the number of Chapter 7 filings and put responsibility back on the debtor. Declaring Chapter 7 bankruptcy is ethically and morally wrong and through different reforms this current “right” would be considered a crime.
Bankruptcy was slowly transformed through history from being a crime committed by debtors into a social welfare program. In the past, bankruptcy offenders were severely punished. “Before the mid-19th century, bankruptcy was a crime” (Pomykala 16). There were many ways to punish those who committed this heinous act. The Pennsylvania Bankruptcy Act of 1785 allowed the flogging of these offenders while their ear was nailed to a post and afterwards the ear was cut off. Similar to Hester Prynne’s punishment of wearing a scarlet “A” on her chest for “adultery“, people who committed the act of bankruptcy were “branded on the thumb with a “T” for “thief” (Pomykala 17). Various punishments like these served as a warning to future violators. B...

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