The origins of the world “bankruptcy” are Latin. In ancient Italy, bankers operated in open areas, such as public markets or town squares from a bench. If a banker became insolvent, that is, no longer had the means to operate his business, he would break the bench, thus letting the public know that he would no longer be conducting business. “Bankruptcy” has two Latin roots, “bancus” meaning bench, and “ruptus,” which means broken. This means the word “bankruptcy” literally translates to “broken bench,” and comes from the ancient Italian practice.
For as long as there have been debtors, there have been people who have been unable to pay their debts. Historical accounts of bankruptcy look far different from what we see today. For example, in ancient Greece, if a man owed a debt that he was unable to pay, he and his family were forced into debt slavery until the creditor determined that they had worked off the debt with physical labor.
Most local governments in Greece limited this debt slavery to no more than five years and required the creditor to grant them both life and limb. In eastern Asia in medieval times, the penalty for someone who became bankrupt three times was death. The first recorded bankruptcy laws in England are from the sixteenth century and painted insolvent debtors as crooks.
Thankfully, bankruptcy in the United States, and in Utah, looks much different than it did in these other countries long ago. The purpose of bankruptcy is to allow debtors who are unable to fulfill the terms of their credit agreements a way to clear the debts. The law allows for this to happen in several different ways. In some cases, the debtor’s assets are repossessed or liquidated (sold) and, with a few exceptions, the remainder of the debt is forgiven. Over 11,000 individuals and businesses filed this type of bankruptcy in Utah in 2012, which accounts for 68% of the statewide filings for the year.
In other cases, the debtor will participate in a repayment plan that is overseen by the courts and an appointed trustee. Depending on income, some debts will be discharged, and others will be repaid, often at a lower interest rate, over a period of 3-5 years. This allows the debtor to keep their assets. In 2012, there were 5,207 such bankruptcies filed by individuals in Utah, approximately 32% of total filings statewide.
Bankruptcy laws in Utah are ever changing and choosing an attorney who specializes in bankruptcy will ensure you are being represented by someone who is up-to-date on all of the latest changes. It will give you peace of mind to know your case is being handled carefully and competently.