The concept of Bankruptcy originated in the bible at Deuteronomy 15:1-2 as follows:
“At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD’s release” (Deuteronomy 15:1-2)
The word bankrupt was derived from the Roman practice of sending soldiers into the marketplace to break “rupt” the bench “banco” of merchants who were not paying their bills. This morphed into the concept of appointing a “receiver” in the common law. The logic is based upon the assumption that the debtor does not have enough money to pay all his debts so a system was worked out to decide who gets paid. what.
Our modern day bankruptcy system is controlled by Federal Bankruptcy Code which is located at 11 United States Code. For a synopsis of how the code works please see my summaries under Chapter 7, Chapter 13. Chapter 11 applies to businesses who want to reorganize OR individuals with more than 1 million dollars in secured debt.