One of the main purposes of bankruptcy is to relieve an honest debtor of debts, thereby providing an opportunity for a fresh start. Bankruptcy was given recognition in 1789 upon the adoption of the U.S. Constitution where it says that Congress shall have the power to establish “uniform laws on the subject of Bankruptcies” throughout the United States. U.S. Const. I, section 8, Cl. 4. Involuntary bankruptcy was the first act enacted by Congress in 1800 and voluntary bankruptcy followed in 1841. The framers of our Constitution, in their ultimate wisdom, wanted to provide the honest debtor, who got into circumstances beyond their control, with a way out so that they could rebuild their financial future.
Benefits of bankruptcy include relief from creditor harassment and relief from stress and anxiety because you are unable to pay your debts as they become due, etc. In most situations, bankruptcy helps because you get out of debt and it provides you with a fresh start. Your debts are either completely eliminated (Chapter 7) or repaid over time (Chapter 13). By filing for bankruptcy, you, the honest debtor, are afforded a fresh start and you’re able to regain control of your financial future.