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Now that I have your attention. I would like to give a brief history of bankruptcy. The concept and laws of bankruptcy have been around for quite some time. How long, exactly?
Bankruptcy actually dates back to 1400 B.C. -- At the end of every seven years thou shalt make a release. And this is the manner of the release; every creditor shall release that which he hath lent unto his neighbor; he shall not exact it of his neighbor and brother; because the Lord's release hath been proclaimed.
In the early 1300’s, bankruptcy was considered a crime and debtors could be imprisoned until their families paid the debts back. The first English bankruptcy law is believed to have been established in the early 1500's. Bankruptcy was initially created to help creditors not debtors. In fact, in these early cases, debtors were subject to incarceration for failing to pay their debts. This came to be known as "debtor's prison."
In 1604, a law was passed in England allowing a debtor’s ear to be cut off for failing to pay his debts. In 1705, bankruptcy reform was enacted in England which provided debtors with two alternatives; participate and cooperate with a structured repayment plan in exchange for a discharge of debts or accept the death penalty.
The first bankruptcy act enacted by the United States congress was in 1800, though it was only for involuntary proceedings. The United States passed its first bankruptcy law which was roughly modeled after the British version but did not have any provision for the death penalty.
In 1898, Congress passed new legislation which is considered to be the foundation of modern bankruptcy law. The new laws provide for voluntary bankruptcies and the discharge of virtually all debts.
In 1938, Congress added the forerunner of today’s Chapter 13 which authorizes individuals to pay back just a portion of their debts in accordance with a formulated plan.
In 1984, the Bankruptcy Reform Act was amended to prevent discharge of many debts.
In October of 2005, sweeping changes were made to the bankruptcy code, designed to (at least in part) hamper the ability of consumers to get chapter 7 ("fresh start") bankruptcy relief. Consumers would be required to pass an income-eligibility test (commonly known as the "means test") and would have to comply with certain educational requirements, before being permitted to go bankrupt. Modern bankruptcy laws (until very recently) provided that one could not obtain a bankruptcy discharge (under chapter 7) if a prior case had been filed within 7 years time. Under present law, that restriction has been expanded to 8 years time.
So is bankruptcy immoral? Absolutely not. Realize that not only is bankruptcy sanctioned by the U.S. federal government (you are exercising your rights under federal law).
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