A Brief Context & History of Western Bankruptcy Law: Part 3

We’ve come to the third and last installment of our overview of the history of bankruptcy law in the west (and specifically the United States). Though we’ve been able to see bits and pieces of modern-day law developing throughout history, much of the law has looked quite different from what we know today. If you recall, western bankruptcy law in its infancy did very little to protect the debtor and was used almost completely as a means for the creditors to either ruthlessly get their money back or to exact revenge on the debtor when he was unable to pay. In this last post, we will look at the most recent history of bankruptcy law that will explain how we have gotten to where we are today.

Picking up where we left off last time, the next major reform came with The Bankruptcy Reform Act of 1978, often simply referred to as “The Bankruptcy Code.” It went into effect on October 1, 1979 and contained four sections or “titles.” The details of each of the four titles are technical in nature and quite a bit could be written about each one, so we won’t cover them in detail here.

In addition to establishing and defining the four titles, the 1978 Act also dramatically altered the courts themselves by conferring pervasive subject matter jurisdiction to the courts. The act granted jurisdiction over all “civil proceedings arising under title eleven or arising in or related to cases under title 11.” 28 U.S.C. §1471(b) These new bankruptcy courts were designated as adjuncts of the district court, but for all intents and purposes, they operated as free-standing courts apart from the district court. The newly-granted jurisdiction was given to bankruptcy judges who would continue to be Article I judges appointed for a set term.

Though many of the changes made with the 1978 Act served the general population better than previous bankruptcy law, the provisions of the Act weren’t without scrutiny by some. Take, for example, the case of Northern Pipeline Co. v. Marathon Pipe Line Co. in 1982. In this case, the court determined that the wide grant of jurisdiction given to bankruptcy judges was unconstitutional because those judges were not appointed under and protected by the provisions of Article III of the Constitution. While the technical details of this case are fascinating, the explanation is too lengthy to detail here; however, the important part to note is that this decision paved the way for the next set of reforms to be made.

Because of the court’s ruling that the appointment of the judges and their broad jurisdiction was unconstitutional, the law needed to be adjusted. In the time immediately following the 1982 case, Congress put into place the “Emergency Rule” until such a time where something permanent could be hammered out and put into effect. It’s interesting to note that many challenged even the constitutionality of the “Emergency Rule” itself, so it was clear that something permanent needed to happen.

Finally, in 1984—two years after the initial Marathon case, Congress implemented a “permanent” solution with the Bankruptcy Amendments and Federal Judgeship Act of 1984. In many ways, this act resembled the Bankruptcy Act of 1898 (which we covered in previous blog posts) by re-designating separate units for judges under the district court.

Since 1984, a couple more acts have been passed, including one in 1986 and one in 1994. These acts dealt more specifically with cases of family farming and mortgage and banking, respectively. Today, bankruptcy cases in America are all subject to the rules spelled out by these reforms.

Though this three-part series has only been the most basic of a review of how bankruptcy law developed in the west, and more specifically, in America, it should give you a clear picture of just how complex and involved bankruptcy law can be. Also, because things are constantly changing, getting the best bankruptcy settlement requires the knowledge of someone who has studied the law and is up to date with the very latest changes to the laws. In case you missed them, click here to view Part 1 and click here to view Part 2.

At Burr Law, our bankruptcy attorneys are experts and their expertise means they will use the law to your advantage, always working for the best possible outcome for you. After all, bankruptcy law is all about protecting you and looking out for your future. Always keep in mind that the laws that exist are there to protect you.

If you’re facing a tough financial situation and need more information about bankruptcy, please don’t hesitate to contact one of our Milwaukee bankruptcy attorneys and let us help you.

A Brief Context & History of Western Bankruptcy Law: Part 2

In this second installation of our three-part blog series on western bankruptcy law, we will pick up where we left off last month. We so far have been looking at the evolution of bankruptcy law in England as that is where the formation for our United States laws came from. We’ll still continue in England as there is a little more to cover, and then we’ll look at the beginnings of some laws in the United States.

We had last talked about the “Insolvent Debtors Act 1813.” If you recall, this act was a move toward more protection for those owing a debt; however, the Act still did favor the creditors quite a bit and didn’t offer true protection for debtors. Though things were starting to move in a positive direction, there was still a long way to go to bring the laws to a place where they worked to protect all parties.

The page really started to turn, and so did attitudes, in 1825. In this year, the “Bankrupts Act 1825” was passed, and this was the first law that allowed people to initiate the proceedings for their own bankruptcy. They did need to do this in agreement with their creditors; however, it was the first time that they had any real say in the process or in initiating the process. Prior to this only a creditor could bring charges to a debtor, and if they couldn’t pay, it was often done as a measure of revenge or as punishing those who owed a debt. Many have questioned if processes that only favored creditors actually served to try to resolve an issue or if they were really simply there as a way to punish people who were insolvent.

1825 marks the beginning of a time when both parties started to see the process as a means to truly resolving an issue and looking out for the interests of both parties and come to as amicable a solution as was possible given the circumstances.

By the middle of the same century, attitudes towards corporations were also changing. Thanks, in part, to the South Sea Bubble fiasco and some other high-profile cases in which people lost a lot of money, many people started to view companies as dangerous to invest in and also inefficient and incompetent. Without being able to trust their own investments, the economy stalled as no one wanted to put up money to support businesses that had proven to simply lose money and be a poor investment. Through a few pieces of legislation, companies were able to be started without royal permission, and companies could take on their own separate legal “personality.” This separated company debts and profits from being tied to individuals personally.

In the next several years, quite a bit happened in terms of bankruptcy law for corporations. While this history is fascinating, we’ll continue on to talk about personal bankruptcy law as that is the focus of this blog series.

While laws were changing and the foundations of modern bankruptcy was being set in Great Britain, the same thing was happening here in the U.S. Because of the relatively young economy at the time, the changes in the U.S. were fewer and further between, but the general direction of the laws were following those of Great Britain throughout the 1800s.

The first real law that established our modern concepts of debtor-creditor relationships came in the form of the “Nelson Act” of 1898. Though changed over time, this Act would ultimately be in tact until a major overhaul in 1978 which we will look at in depth next month.

Next came the Bankruptcy Act of 1938, also known as the “Chandler Act.” Though the previous “Nelson Act” remained in effect, the “Chandler Act” expanded voluntary access to the bankruptcy system. It also gave the US Securities and Exchange Commission authority in the administration of bankruptcy procedures. This was yet another move towards formalizing and establishing precedent for bankruptcy filings.

Although we’ve seen how things have been changing over the centuries, the biggest reform to date will come in 1978, and that will be the single biggest Act that affects the current-day law that we practice at Burr Law as Milwaukee bankruptcy attorneys.

We’re reminded again that, the history is interesting, but what matters most for our clients right here and now is that we know the law and work toward your best interest. Our Milwaukee bankruptcy lawyers are experts in the field and always have your future and well-being in mind as we work towards the best possible outcome for you.

Missed the first installment? Click here to take a look at that. As always, we welcome you to contact us to get more information on what we can do to help you.



A Brief Context & History of Western Bankruptcy Law: Part 1

In this three-part series, we will be taking a brief look at the history of western bankruptcy law. Though there is detailed history of bankruptcy law dating back to the most ancient societies, it is, most specifically, English bankruptcy law starting in Renaissance England that has most directly evolved into what we know and practice today as Milwaukee bankruptcy lawyers.

It bears repeating that some of the earliest societies we have records of do have detailed histories of how debt and debtors were handled in society. While the history is fascinating, it’s not the purpose of this series to review the entire world history of debt and bankruptcy law & culture as it is simply too large a subject to cover in a small blog series. Furthermore, some of the ancient societies used slavery and severe criminal punishment as an integral part of how debt was repaid or settled, and that simply is a far cry from what has evolved into modern bankruptcy law which is now used as a protective measure to the debtor to protect his or her future and financial well-being.

We begin in Renaissance England in 1542. This is when the first recognized piece of legislation, called the “Statue of Bankrupts 1542” was adopted into English law. Though debt and debt repayment was handled in society before this, it was done so informally and satisfaction conditions were often largely left up to the creditor alone. This statue was the first piece of legislation officially adopted to actually give some formal structure to the process of debt satisfaction, and while it didn’t go very far in protecting the parties owing a debt, it did start to provide some basic measures of protection for them. It should be noted that this first piece of legislation was created more to protect the creditor than it was the debtor. Prior to formal legislation, many debtors would seek to intentionally borrow with no good faith intention of repaying, and when they had borrowed enough, they would flee the land. Though there were certainly people with debt for legitimate reasons, many “bankrupts” at this time were often seen as thieves because of the ones who borrowed with no intention of repaying.

By 1705, it was becoming clear that the approach of seeing debtors as criminals was not accurate in many cases, and steps towards a more humane approach in regard to the relationship between debtors and creditors was sorely needed. The “Bankrupts Act 1705” was adopted, and this act gave the Lord Chancellor the power to step in and mediate in bankruptcy cases and to actually discharge debts when the agreed upon procedures had been followed. This was really the first move toward the creation of laws that were designed to start to protect the borrowers and not just the creditors as had been the case up until that time. Still, the law was largely in favor of the creditors, and in the famous case of “Folwer v Padget, Lord Kenyon reasserted the old feeling toward debtors when he said “Bankruptcy is considered a crime and a bankrupt….is called an offender.” Still, though they had a long way to come, it is with this act that we can really start to see the beginning of changes in attitudes toward protecting all people in different financial situations.

We jump ahead about one hundred years, and English society continued to progress in the overall perception of indebtedness. By 1813, the “Insolvent Debtors Act 1813” provided for the protection from jail after 14 days. Under this act, debtors could be sent to jail in some cases, but they had to be released after 14 days provided their assets did not exceed £20 (about $30). If, however, they did have more than that, they were ordered to pay their creditors from their assets. Even though this was a big step in the right direction toward offering the people more protection, creditors did still have the upper hand, and they were ultimately the ones who had the most power in dictating an outcome that was ultimately beneficial to them.

In the next installation in this series, we will start to hear about changes in laws and attitudes that really sought to provide much more protection to the borrowers and really start to give them rights and protections in the entire process of making financial satisfaction. The changes in laws will really start to form the foundation of modern bankruptcy law and practices as a protective measure for the borrowers and not simply a way to only look out for creditors.

While the history of bankruptcy law is certainly fascinating, we are seeing that, in its infant stages, it is much different from the laws we have today. At Burr Law we thoroughly understand today’s bankruptcy laws that are truly there to protect you and your financial future. As Milwaukee bankruptcy lawyers, we’ll work with you and fight for you to protect your best interest.

Look for next month’s installment of this three-part series, and in the meantime, don’t hesitate to contact us today with all your questions about how we can help you.



Tips to Avoid Financial Troubles During the Holidays

As you head into the holidays, it’s important to keep a close eye on your financials and spending habits. Many people tend to go a bit overboard because of parties and other obligations and find themselves in trouble after the holidays have ended. Milwaukee bankruptcy Attorney Michael Burr has a few tips to help keep your spending under control this season.

Shop with a plan.

Just as you bring a list when you grocery shopping, it’s important to make a list when buying gifts. Before you go to any stores, decide how much you are able to spend on each person and stick to that amount. It’s helpful to jot down a few gift ideas, too. If you find yourself wanting to purchase things that aren’t on your list, hold on to them but give yourself time to look around and really think about whether or not it’s a necessary purchase. Note: Don’t forget about extra expenses like wrapping materials, host gifts, etc. when making your list!

Retail isn’t the only place to shop.

In this day and age, there are tons of opportunities to find lower prices on gifts for the holidays. Don’t feel as though you need to purchase every gift from the mall or other retail stores. Many sites offer free shipping and other discounts during the holidays.

Pay in cash as often as possible.

The biggest mistake people make during the holidays is racking up enormous charges on their credit cards that they aren’t able to pay back after the holidays. Try to pay for as many purchases with cash as you can. If you don’t feel comfortable carrying cash and don’t have a debit card, use one credit card and keep close tabs on your purchases by writing each one down.

Don’t wait until the last minute.

Rushing to the store the day before (or worse, the day of) a party can cause you to impulsively buy the first thing you see. When you don’t have time to think about your purchase, you’re more likely to overspend or convince yourself that the cost is not important. Plus, if you’re an online shopper, waiting until the last minute will generally lead to massive shipping fees to get things on time.

The best advice we can give is to make a budget plan and stick to it. There’s no need to go out of your means to impress anyone. Enjoy the holidays with friends and family and keep your finances in check. Our Milwaukee bankruptcy team at Burr Law Office is here to answer any questions you may have about shopping during the holidays!

Bankruptcy Consequences: Skipping Payments

Many people avoid filing despite increasing debt because they are afraid of how the process will affect their credit score and ability to rebuild their finances. However, not filing for bankruptcy with a lawyer when you no longer have the ability to pay your debts can have dire bankruptcy consequences.

Wage Garnishment

One of the first steps your creditors will take when you neglect to pay your debts is to garnish your wages. The maximum amount that can be garnished from you paycheck is usually 25 percent of your disposable income if it is greater than 290 dollars, or any amount greater than 30 times the federal minimum wage. While tips are generally not garnished, your wages, salaries, commissions, bonuses, and pensions can all be garnished until your debt is paid.

Liens and Levies

A lien refers to the legal claim over your property by the government or a specific creditor. A levy, on the other hand, refers to the actual seizure of property in order to satisfy a debt.  Individuals who fail to pay their debts without filing for bankruptcy may face one or both of these penalties. In the event that a levy is put in place, your creditor has the right to repossess and sell property that you own, such as your car or home—as well as property that is yours but held by another party, such as your bank accounts, retirement accounts, dividends, and even the cash value of your life insurance policy.


Individuals who fail to pay their mortgage for a prolonged period of time may face foreclosure, a process in which the rights to your property are taken away and the property is sold in order to satisfy unpaid debts and liens.

Don’t let outstanding debts increase your risk of repossession, foreclosure, or other bankruptcy consequences . Get the legal representation you need by contacting Burr Law Office at (262) 827-0375. You can also set up an initial consultation by visiting us online.