Bankruptcy is almost like an American past time. With companies like GM's June first bankruptcy filing of chapter 11 debt relief. It's much like a game of tug o war between competing Yankee principles or the reinvention of responsibilities.

During colonial America where money lending was governed by moral codes as well as legal ones. This was a time when defaulting on your debts was considered to be a moral one. With some owing as little as $40.00 shillings. Even owing just this little amount you could find yourself in the debtors prison. With all the financial turmoil following the Revolutionary War. Delegates to the constitutional Convention predicted that the nation may need laws. Which would enable people the ability to go belly up in a some what orderly fashion. This brought forth the first Federal Bankruptcy laws. These laws which drew on English statutes was signed in 1800. It was rounded to benefit at least one delegate. Robert Morris of Pennsylvania. Who found himself three million in debt from opening his wallet to Washington's Army. From this he found himself locked up for three years.

When further legislative attempts were advocated by interest groups and state rights advocates. Who had feared corruption and disagreed that bankruptcies should be regulated at all by the Federal Government. The Bankruptcy act of 1898 expanded debt protection to creditors as well as corporations. In the 1970's most firms still saw bankruptcy as an unjust fire sale. By this time congress sought to steer more corporations back into the black, by simplified filing for both corporations and personal bankruptcy. This change in the bankruptcy laws got significant results. With bankruptcy increasing six fold from 1980-2005. Then again in 2005 new stricter bankruptcy laws where invoked. However now with the current recession at hand and an unemployment rate over 9%. We are once again seeing a huge increasein people and corporations filing for bankruptcy like gm and lehman bros.