History of Bankruptcy and Law Practices Essay Example | Topics and Well Written Essays - 2000 words

History of Bankruptcy and Law Practices - Essay Example This concept originated from Italy where in the past bankers placed a bench in public areas which was referred to as bancus, when the banker could not continue with his business he or she would break his bench and therefore the Italians this to as bancus raptus which means broken bank. This practice was also evident in other regions example where by 1596 Spain had declared some of its four states bankrupt, in Asia individuals faced the death penalty if they became bankrupt more than three times. This paper discusses the origin of bankruptcy, the bankruptcy process, the consequences of bankruptcy, bankruptcy relief and the bankruptcy chapters as per the united state constitution and the 1978 and 2005 amendments on these acts. The paper also discusses bankruptcy crimes which involve debtors concealing information. Early in Italy bakers used to place benches in public areas where they would draw bills, count money and write letters, these bankers were wealthy individuals in the society and this made the public to have confidence in depositing their property with them. The banker wrote a note which was evidence of property held and assured the same amount on demand. The paper was transferable and this note would at any time exchange the note for money. However when there was a doubt about the note or when the banker could not continue with his busine... Bankruptcy laws were put in place to protect creditors. The laws encourage payment of debts to creditors, however recently the amendments have also helped protect individual debtors through the various acts present. It ensures that creditors recover their owed amount through the sale of the debtors' assets or through installments over a given period of time. Bankruptcy process: There is a procedure that is followed by whether the debtor or creditors when filing a petition, the first step is that the court receives the petition either from the debtor of the creditor, this is presented in federal courts because state courts do not handle bankruptcy cases, the court assigns a trustee whose duty will be to chair meetings, sell assets and distribute the amount recovered among creditors. The trustee shares the debtor and creditor meetings and the debtor is required to provide information regarding all his assets, if the debtor provides all the information without concealing information then he will be eligible to the relief of a portion of the debt. Depending on the arrangement the trustees duty is to distribute the funds to the creditors, when the assets are sold according to chapter seven then the trustee distributes the amount among creditors, however according to chapter 13 where the debtor is required to give a portion of his income over a specified period then the debtor must pay the trustee this amount who will then distribute the amount. Therefore the debtor does not directly deal with the creditor which is now the duty of the trustees. Advantages and disadvantages of bankruptcy: There are various negative and positive consequences when an individual or organization is