Bankruptcy questions and Factors

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Bankruptcy is a relief to many people in this days, however bankruptcy has a very interesting history before becoming what we know it to be today. Tracing the concept of debt forgiveness back all the way to the Old Testament, we see Moses referencing a Jubilee, or Holy, Year to take place once every fifty years. During that year, it was decreed that all debts would be eliminated and those Israelites that had sold themselves into slavery would be freed. In Deuteronomy 15:1-2 increases the frequency of these debt forgiveness periods: "At the end of every seven years you must cancel debts. The most widely-accepted theory on the origin of the word "bankruptcy" comes from a mixing of the ancient Latin words bancus (bench or table) and ruptus (broken). When a banker, who originally conducted his public marketplace transactions on a bench, was unable to continue lending and meet obligations, the bench was broken in a symbolic show of failure and inability to negotiate.

In the United States, early federal bankruptcy laws were temporary responses to bad economic conditions. The first official bankruptcy law was enacted in 1800 in response to land speculation. In the United States, early federal bankruptcy laws were temporary responses to bad economic conditions. All of these laws contained some allowance for discharge of unpaid debts. The first two laws, those of 1800 and 1841, allowed only minimal discharge of debt; while the 1867 law was the first to include protection for corporations.

Modern bankruptcy laws and practices in the United States emphasize rehabilitating (reorganizing) debtors in distress with a limited emphasis on punishing the debtor. The economic upheaval of the Great Depression yielded additional bankruptcy legislation, in particular, the Bankruptcy Act of 1933 and the Bankruptcy Act of 1934. In a 1934 U.S. Supreme Court decision, the Court reveals that the primary goal of bankruptcy laws was to offer debtors a "fresh start" from financial burdens. In Local Loan v. Hunt, the Supreme Court asserts, "It gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt."

Since bankruptcy is the opportunity that give unfortunate people to have a clean start, they want to complete their bankruptcy process as correct as possible. There are some difference between bankruptcy chapters. The more common bankruptcy chapter that a person can request or file are Chapter 7 and Chapter 13. Both of this chapter grant the discharge of specific debts, however, the chapter 13 has a payment plan that needs to be completed.

Different circumstances can make a person resort to the bankruptcy. This circumstances can be sometimes the difference between the chapters that better suits the person. Learning what some of this circumstances are can help us understand why some chapter are more use than others. After knowing if the circumstances have a pattern, then some conclusion might be drawn.

We can make a simple survey that includes a Likert scales of measurement. Both qualitative and quantitative types of data will be gather for this survey. This survey will be distributed among the persons that are filing bankruptcy to determine the circumstances that make them file a bankruptcy. By analyzing each factor we will determine the reason of the chapter that each circumstance required.

Reference

New Generation Research, Inc. A Brief History of Bankruptcy http://www.turnarounds.com/