Bankruptcy Laws

Collier's New Encyclopedia (1921)

regulations passed by a competent authority with a view to distributing the property of an insolvent equitably aitably among his creditors and free the debtor from further obligation. In England, before 1841, only a tradesman could be a bankrupt. The distinction was then abolished. It was abolished in the United States in 1869. The act "to establish a uniform system of bankruptcy throughout the United States," was passed by both houses of the 55th Congress, and by the approval of President McKinley, became a law on July 1, 1898. It was subsequently amended in 1903, 1906, 1910, 1911, 1915, and 1917. The provisions under which a man can be thrown into bankruptcy against his will are as follows: (1) Where a man has disposed of his property with intent to defraud. (2) Where he has disposed of his property to one or more creditors to give a preference to them. (3) Where he has given a preference through legal proceedings. (4) Where a man has made a voluntary assignment for the benefit of his creditors generally. (5) Where a man admits in writing that he is bankrupt. The last two provisions are practically voluntary proceedings. Under the common law, a man is considered insolvent when he cannot pay his debts when they are due; under the new law, he is deemed insolvent only when his property, fairly valued, is insufficient to pay his debts. Only two offenses are cited under the new law: one when property is hidden away after proceedings in bankruptcy have been begun, and the other when perjury is discovered. Discharges are to be denied in only two cases; one, in which either of the offenses detailed has been committed, and the other, when it is shown that fraudulent books have been kept. The term of imprisonment for either of these offenses is not to exceed two years.