A Slice of World Bankruptcy History
The idea of canceling debts is not a new one. In Biblical times, debts were also overwhelming. People virtually had no recourse and when facing insurmountable debt, sold themselves into slavery. During these times, the Old Testament records Mosaic laws that required the Israelites to forgive debtors their debts every seven years. However, this law did not apply to foreigners.
The Quran also encouraged granting debtors extra time so they could overcome hardships and repay debt during easier times.
However, in ancient Greece, no concept of bankruptcy existed and entire families became slaves based on unpaid debts. Their physical labor repaid the debt. Not all, but some areas of Greece limited debtors’ slavery to five years.
England’s concept of bankruptcy under Henry the Eighth was to take all the debtor’s assets to pay creditors and throw the debtor in jail. England was famous for its debtor's prisons during the 1500's where debtors could spend their whole lives in prison or even be put to death for their debt. Many original U.S. settlers voyaged to America to escape the cruel punishment of England’s prison system for debtors.
Today, in Europe, The United Kingdom and the United States, bankruptcy emphasizes partial debt repayment along with education and rehabilitation. This approach is much more humane and enables individuals and companies to overcome insolvency and avoid repeating the same mistakes. In a sense, bankruptcy represents economic evolution.