Though it has become more common recently, there are still many misgiving and misunderstanding regarding the word bankrupt. Considering that, in the United States alone, there are been about a million bankruptcy filings annually for the past 15 years, perhaps it is time that we take a closer look at this word.
First used in English by Sir Thomas in More’s Apologye of 1533, the term initially applied solely to traders (such as in a market) and not to individuals, which is somewhat distant from our modern, general understanding of the term as just meaning a lack of the ability to meet obligations.
While the word banca can be translated as ‘bench’ or ‘moneylender’, the meaning comes from the idea that a merchant/trader would occupy a literal bench in a marketplace, and, being unable to pay their obligations, the merchant’s bench would be physically broken, preventing them from doing business in the market.
From its original meaning, we have seen a remarkable shift: by 2012, business-based bankruptcies only accounted for 3% of total bankruptcies, the rest were from individuals.
Having become a lot more commonplace than it once was, being bankrupt has lost a large degree of the social stigma that it once possessed; however, some of the fallacies associated with it have remained.
Bankrupt – explanation
First, being bankrupt has little to do with being lazy or excessive spending: circa 1653, Zachary Boyd wrote in Zion’s Flowers that: “He who in sloth does like a Dormouse sleep, Shall at the last sure prove a Bankrupt;” however, data shows that the majority of financial issues are caused by serious illness, job loss, or divorce.
Second, the bankruptcy process is not a free way to gain material possessions: bankruptcy proceedings typically involve an agreed upon repayment plans for some debts, but, as we can see from a 1776 edition of the Newcastle Journal, stating that: “The commissioners in a commission of bankrupts..intend to meet..in order to make a dividend of the..bankrupt’s estate and effects,” this process is nothing new.
Third, though it is intended to provide relief from temporary hardship, being bankrupt was never meant to be a “way of life:” a precursor to modern laws, writing in 1800, Archibald Cullen, in Principles of the Bankrupt Law, correctly posits that: “Although a bankrupt is discharged by a certificate regularly obtained, he may preclude himself from the benefit of it, by making himself liable on a new promise.”