History of bankruptcy law

If a man owed and he could not pay, he and his wife, children or servants were forced into "debt slavery", until the creditor recouped losses via their physical labour.

However, servants of the debtor could be retained beyond that deadline by the creditor and were often forced to serve their new lord for a lifetime, usually under significantly harsher conditions.

In Islamic teaching, according to the Quran, an insolvent person was deemed to be allowed time to be able to pay out his debt.

This is recorded in the Quran's second chapter (Sura Al-Baqara), Verse 281, which notes: "And if someone is in hardship, then let there be postponement until a time of ease.

Medieval canon law discussed extensively provisions to mitigate the harshness of debtors' punishments.

According to al-Maqrizi, the Yassa of Genghis Khan contained a provision that mandated the death penalty for anyone who became bankrupt three times.

In Fowler v Padget[5] Lord Kenyon reasserted the old sentiment that "Bankruptcy is considered a crime and a bankrupt in the old laws is called an offender."

3. c. 102), debtors could request release after 14 days in jail by taking an oath that their assets did not exceed £20, but if any of their creditors objected, they had to stay inside.

Bankruptcy proceedings agreed between creditors and debtor also occurred when a trader filed a declaration of insolvency in the office of the Chancellor's Secretary of Bankrupts, which was then advertised.

Before, if a corporation had gone broke, the people that lent it money (creditors) could sue all the shareholders to pay off the company's debts.