The Bankruptcy Act of 1841
In my last post, we discussed the first bankruptcy code in the United States, the Bankruptcy act of 1800; in this post we will turn to the second incarnation, The Bankruptcy Act of 1841. Clearly, congress was not interested in creative nomenclature. Nonetheless, there were other improvements in the content of the new code. First, debtors could now file bankruptcy for themselves, voluntarily. Second, bankruptcy was available to individuals rather than just merchants. Third, the more informal processes utilizing administrators was left behind in favor of using the district courts.
However, the ability to discharge large debts remained limited – most of the 19th century period is characterized by a general preference for creditors. In a similar vein, though voluntary bankruptcies were allowed, most bankruptcies were involuntary.
The Bankruptcy Act of 1841 was even more short-lived than the Bankruptcy Act of 1800, being repealed in 1843. The political landscape at this time is a bit out of scope for this post, but the short version is that, while President William Henry Harrison was amenable to the new bankruptcy laws, he died, and his successor John Tyler repealed The Bankruptcy Act of 1841 in 1843.
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Next post, we will continue our discussion with the next incarnation of the bankruptcy regime in America, passed much later in the 19th century. Many changes have yet to occur at this point in the history, so don’t be dissuaded from filing yourself if our discussion so far makes you a bit pessimistic; things get better. If you are interested in the history and philosophy of the economy, bankruptcy, and debt, stay tuned for my blog posts. And, if you are thinking about filing, reach out to us at www.lifebacklaw.com.
