Bankruptcy is a concept that did not always exist. For instance, in Ancient Greece there were no bankruptcy laws. If a person was unable to pay his debts, the person, as well as his immediate family, would be forced into slavery until the debt was worked off.
Like the Ancient Greeks, the first known laws of the Ancient Romans punished those who could not pay their debts harshly. If a person could not pay an acknowledged debt then that person could be cut into pieces, or sold as a slave. Later on, Ancient Rome developed laws dealing with debt that were much less severe. These laws are the ancestors of our modern bankruptcy statutes.
Religious texts dealt with those who owe debts as well. The Old Testament mandated the forgiveness of all debts owed by community members in every seventh year. Foreigners’ debts were forgiven in the Year of Jubilee which occurs every fifty years. The Quran’s second chapter states that an insolvent person should be given time to pay his debts.
Bankruptcy is a concept that was documented early on in East Asia also. The Yassa, a code of law created by Genghis Khan, mandated the death penalty for anyone who became bankrupt three times.
