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The Early History of Bankruptcy Law in The United States

por Nathaniel Olvera (2019-09-21)

When the framers of the Constitution provided in article 1 section 8 the Congress be empowered to establish uniform laws on the subject of bankruptcy throughout the United States they sought to promote a national economy based on into regional and 온라인카지노 international trade and cultural products and manufactured goods. A national bankruptcy law was essential to that goal. Although some states mainly in the North had insolvency and bankruptcy systems of their own the Constitution implied the Congress have exclusive jurisdiction in that field. Confirmation of their view can be found in section 10 of article 1 which prohibits state laws impairing the obligation of contracts, the essential feature of any bankruptcy law.

The first national bankruptcy law did not come into effect until 1800. Unpopular with the Jeffersonian is and restricted in its coverage, it was surely repealed. The same fate befell the bankruptcy laws in 1841 1867 leaving the way open to the states to retain or to create their own insolvency and bankruptcy systems. But could such laws be constitutional? It took the court almost 40 years to give the states definitive guidelines to follow. Three issues had to be resolved. Did the Constitution give Congress exclusive authority and the bankruptcy field? If not could state laws discharge debts thereby impairing obligation of contracts? And could such discharges of constitutional applied to debts contracted in any other state?

These questions did not reach the court until 1819, suggesting the lenders and borrowers alike generally have no crore to stay relief laws and seeing them as mutually beneficial and in the public interest. In Sturges against Crowenshield, Chief Justice John Marshall spoke the court striking down the or consultancy laws from 1811. Absent of a national bankruptcy law, the states could create their own systems, but they could not discharge their contracts. The next day the court also struck down a Louisiana relief will in the case of Macmillan and McNeill, a case involving a debt contracted in South Carolina. Taken together, these two rulings listed authority confused and uncertain. Did the court intended confer bankruptcy powers on the states to deny them the essential power of discharge? These questions marked the beginning of a national bankruptcy law system in the in the United States.

The author can be contacted in relation to Wyoming legal documents and Wisconsin legal documents at the links available here.