Bankruptcy has been around a long time - and gotten some history to it.
Bankruptcy extends back to before the start of the United States, with systems for discharging debt popping up everywhere from the Old Testament (Leviticus 25:8-13). to Julius Caesar, to Genghis Khan, all the way up to modern day.
We'll keep this list a bit more modern, though.
10 Fun Facts You Might Not Know About Bankruptcy
1. Donald Trump isn't the only famous person to use bankruptcy. MC Hammer, Kurt Schilling, and many other rich and famous have had to file bankruptcy. Francis Ford Coppola has had to - twice. While their cases might have involved a few more zeroes than most people's, the rich and famous get to use the same system that anyone else can.
2. Cities can file bankruptcy - but states can't. You might know that Detroit filed bankruptcy, but so has Orange County (1994), Vallejo (2008) and Stockton (2012). Chapter 9 actually allows municipalities to declare, so a variety of public entities are eligible. States aren't, however. So the state is just going to have to pay the bills, I guess.
3. Bankruptcy isn't about "proving" you deserve a discharge. A lot of people believe they need to demonstrate that they are deserving of a fresh start. In fact, the assumption is you are - bankruptcy is a tool, and the only inquiry the Court or the Trustee will typically make is if you qualify, based on either debt limits (Chapter 13) or income (Chapter 7).
4. Most people will never meet their bankruptcy judge. We have great judges in Northern California, but most cases never go in front of a judge, and even when they do, most debtor's don't need to attend. Trials are exceedingly rare. Most people that file for bankruptcy will meet a trustee once, answer a few questions, and be done.
5. Taxes can be discharged. Income taxes 3 years from due, 2 years from filed, and 180 days from assessed get the same priority and rights as credit cards and medical bills. As they age out, they become subject to discharge!
6. It's in the Constitution:
"The Congress shall have Power To...establish...uniform Laws on the subject of Bankruptcies throughout the United States...."
ARTICLE I, SECTION 8, CLAUSE 4
7. You probably know someone who has filed. In 2013, 1,038,280 new bankruptcy cases were filed - and a few years earlier, that number was over 1,500,000. So even though you might feel like you're alone, a lot of people are struggling along with you.
8. You can keep your stuff. Just because you filed a bankruptcy doesn't mean a judge is going to make you sell your stuff. or give up your car, or your house, or a motorcycle. Filing the wrong bankruptcy might mean that though - that's why we're here to help you.
9. Chapter 13 doesn't mean repayment - it means reorganization. Many people think a Chapter 13 means you're repaying creditors, and a Chapter 7 means you're not. In fact, very often a Chapter 13 doesn't pay any money to creditors who wouldn't be paid in a Chapter 7. What a 13 does do is give you the ability to pay certain creditors that might survive a 7 (cars, houses, taxes) in a way that helps you get that fresh start.
10. The Supreme Court developed the idea of a fresh start:
"[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt."
Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). I couldn't say it better myself!