The first U.S.
bankruptcy lawwas enacted in 1800, eleven years after the ratification of the United States Constitution, but was repealed three years later. It was approved in response to the financial crises of 1792 and 1797. The Bankruptcy Act of 1800 was very similar to the English bankruptcy law. Since 1996, more than one million people a year have filed for bankruptcy in the United States.
Most seek debt forgiveness in exchange for liquidating their assets for the benefit of their creditors. The rest seek assistance from bankruptcy courts to reach an agreement with their creditors. The law hasn't always been so kind to insolvent debtors. For most of the 19th century, there was no bankruptcy law in the United States, and most debtors found it impossible to receive debt forgiveness.
At the beginning of the century, debtors could have expected even harsher treatment, such as imprisonment for debts. The 1978 Act was an important piece of legislation that initiated a series of legal controversies, and many judicial amendments and clarifications to the 1978 Act were implemented during the 1980s. Many people came to believe that the forces that drove people to insolvency were often beyond their control and that giving them a fresh start was not only fair but also in the interest of society. The effects of the 1978 Forklift Bankruptcy Act were unpopular, leading to the Wayne Cryts protest.
Following the ratification of the United States Constitution in 1789, Congress was granted the power, under Article I, Section 8, Clause 4, to legislate in favor of uniform laws on the subject of bankruptcy throughout the United States.