What is the relevance of Acts of Bankruptcy?

Answer 1

Acts of bankruptcy are an ancient feature of bankruptcy law. Bankruptcy law proper began in England in 1542, but procedures against defaulting debtors are much older. These were introduced in 1285 under Edward I in the Statute of Merchants. This statute provided for debt imprisonment and somewhat primitive collection proceedings. At that time, Catholic theologians did not see default itself as sinful, but rather, the act of avoiding the consequences. So, default was not itself seen as a sufficient evidence of insolvency (there were separate laws on 'insolvency', here I just mean the actual inability to repay loans). So 'acts of bankruptcy' began as ways to determine if the intent of debtors was to defraud creditors, and in a sense, force them to do so if they were insolvent. William Blackstone lists 11 'acts of bankruptcy', and it is hard to imagine being insolvent and not committing one or more such acts. In the United States, bankruptcy law underwent a transformation from a remedy solely for creditors, to one with features for debtors as well. The list of acts expanded as a result, making 'acts of bankruptcy' less about trapping debtors into demonstrating insolvency and more about defining conditions under which one could legitimately claim to be bankrupt.