Why the opportunity to start over through Bankruptcy is so Important to our Way of Life

There was a time when those who could not pay their debts were subject to arrest and consigned to "debtor’s prison". Indeed the first United States Bankruptcy Act of 1800 continued this practice, allowing creditors to petition to have the debtor’s home broken into, the contents and assets  seized and sold, and to leave the debtor penniless. Central Virginia Community College v. Katz 546 U.S. 356, 373, 126 S.Ct. 990, 1002 (2006).

The result was that people and their families were left homeless and destitute, surviving if at all at public expense, and left unable to support themselves. No doubt many fled westward to escape their creditors. Yet in this country, entrepreneurship, and therefore willingness to take risks to achieve success, has always been respected and encouraged. It is said that many a success story is the product of lessons learned from failure.

Today, bankruptcy strikes a more reasonable balance. Those who find themselves in financial trouble can "reset" their financial condition through a bankruptcy discharge of all or a portion of their debts, and through use of exemptions to keep some types and amounts of property for themselves and their families to ensure a reasonable continued existence.. Over 75 years ago our Supreme Court noted that:,




One of the primary purposes of the bankruptcy act is to "relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes." This purpose of the act has been again and again emphasized by the courts as being of public as well as private interest, in that it gives to the honest but unfortunate debtor who surrenders for distribution the property which he owns at the time of bankruptcy, a new opportunity in life and a clear field for future effort.Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)

We often tell our clients that their first moral obligation is to their families and to preservation of their ability to support themselves. For business owners a shutdown and liquidation is sometimes wasteful and serves no one well.


Here is a list of 30 famous and successful people who had to file bankruptcy.
Ask yourself what would have happened had they not been able to start over.

Abraham Lincoln [ 16th President of the United States ]
John James Audubon [ Illustrated "Birds of America" ]
P.T. Barnum [ The Great American circus owner ]
John Barrymore [ Actor; Romeo & Juliet ]
Kim Basinger [ Oscar - winning actress (filed bankruptcy in 1993) ]
Frank Baum [ Wizard of Oz author ]
Melvin Belli [Famous Lawyer known as 'The King of Torts' (filed bankruptcy in 1995]
Matthew Brady [Famous US Civil War and portrait photographer (filed bankruptcy in 1872) ]
Toni Braxton [ rock star (filed bankruptcy in 1998) ]
Tia Carrere [ Actor; Wayne's World (filed bankruptcy in 1986) ]
Nell Carter [ Housekeeper on Gimme a Break (filed bankruptcy in 1995 and 2002) ]
Miguel de Cervantes [Novelist; Don Quixote ]
Samuel L. Clemens a/k/a/ "Mark Twain" [best - selling American author - humorist (filed bankruptcy in 1894)
Francis Ford Coppola [ Oscar - winning film writer - director - producer (filed bankruptcy in 1998) ]
Cathy Lee Crosby [ Actress - American Author (filed bankruptcy in 1992) ]
Daniel Defoe [Author; Robinson Crusoe ]
Walt Disney [Oscar - winning film producer, animation & theme park pioneer (when a previous ventura failed he filed bankruptcy in 1923) ]
Henry Ford [Automobile manufacturer ]
William Fox [Co-Founder of 20th Century Fox Film Corporation (filed bankruptcy in 1936) ]
Charles Goodyear [19th century American inventor, who discovered how to vulcanize rubber ]
Merle Haggard [Country music star (filed bankruptcy in 1992) ]
Dorothy Hamill [Olympic gold-medal ice-skater (filed bankruptcy in 1996) ]
H.J. Heinz [Founder of Heinz Ketchup ]
Milton Snavely Hershey [ Founder of Hershey's chocolate ]
Robert Morris [Politician who financed Revolutionary War ]
Thomas Paine [Revolutionary War "Common Sense" pamphleteer and activist ]
Debbie Reynolds [Oscar nominated actress-singer, American Author (filed bankruptcy in 1997)]
Oskar Schindler [Activist who saved over 1000 Jews from the Nazis ]
Nikola Tesla [Invented alternating current ]
Johnny Unitas [Legendary Hall of Fame football quarterback (filed bankruptcy in 1991)]