Bankruptcy Act of 1800

By setting up a separate system for debtors and creditors, the United States attempted to curb the number of bankrupt citizens being put in jail.

People were expected to keep their affairs in order and any deviance from upright economic standing was considered a personal fault.

This mounting national debt had destabilizing effects on the economy, leading to increased indebtedness among private citizens.

Despite the prevalence of debt, the nation did not entirely discard English financial practices; however, there were often modifications in the agreements between debtors and creditors.

Federalists in Congress, acting on behalf of financial groups, argued for a national bankruptcy law to address the crisis, but were opposed by Anti-Federalist and agricultural interests.

If two-thirds of the creditors, both in terms of number and amount owed, agreed to forgive the remaining debt, the debtor would be relieved of the obligation.

This framework aimed to assist individuals in managing their debts and introduced a mediator to prevent creditors from hastily resorting to imprisoning debtors.

In totality, many people were further thrust into debt, and the act did not serve the purpose of lowering economic failure for the nation.