9035 Wadsworth Parkway Suite 4500

Westminster, CO 80021

What Is Bankruptcy?

From a legal standpoint, bankruptcy is the condition of not having the financial means of paying one’s debts as they become due. Personally, I define bankruptcy as: “God and government imposed forgiveness of debt, legally releasing people from some or all of their financial obligations.”

Purpose of Bankruptcy

The main purpose of bankruptcy is to give debtors a fresh start in their financial lives, and not be cursed and burdened down with debt that only grows with compounding interest.

Bankruptcy in the United States

Article I, Section 8, Clause 4 of the U.S. Constitution grants Congress the power “To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States,” and Congress has so established such laws. Bankruptcy does not have its origins in the United States. Bankruptcy does not even have its origins in western civilization. Interestingly, bankruptcy in general, and the U.S. Bankruptcy laws in particular, follow patterns of the laws of ancient Israel and described in the writings of Moses, dating back approximately 3500 years to 1500 B.C. Under those ancient laws, there was remission of debts every seven (7) years. Present U.S. law provides that individuals can file (Chapter 7) bankruptcy every eight (8) years, but before Congress made some significant changes to the Bankruptcy laws in the year 2005, individuals could file bankruptcy every seven (7) years as well.

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