This research paper will discuss the history of American bankruptcy legislation and the effect that it has had and currently has on business. To full comprehend what this paper will encompass, an analysis of legislation theory will be presented. Bankruptcy legislation in America dates back to the Constitution which had highly influential clauses. In the early 1800’s numerous laws were passed in response to dire economic conditions (Bankruptcydata.com). The first law to be ratified that was not subsequently repealed a short time later was the Bankruptcy act of 1898. Since 1898 there have been four new acts passed, and three revisions to those acts. The most recent act to be passed was the Bankruptcy Abuse Prevention and Consumer Protection Act Of 2005 which was signed into law on April 20, 2005. This act primarily made it more difficult for debtors to file for Chapter 7 Bankruptcy and bankruptcy discharge. In addition to making it more difficult for debtors to escape their debts, it also implements changes to the laws governing unsecured trade creditors. Throughout bankruptcy legislation’s history, it has profoundly affected business conduct and consumer behavior.
When discussing recently passed bankruptcy legislation, and the effect it has on business today, it is important to understand and be aware of the theory that guides the legislation. Boiled down, laws and acts that relate to bankruptcy really have one objective: to provide for a healthy economy. Without the ability for either an individual or a corporation to recover from debt, there would be many less entrepreneurs. Today, when a burgeoning entrepreneur sets out on his or her first venture, it is with the knowledge that should he or she fail, there will be recourse. This reassurance is what bankruptcy provides, to different extents. Bankruptcy legislation goes hand in hand with laws that govern the business of creditors and debtors. When operating with laws that are too lax on debtors, and do not...