The Bankruptcy Act of 1883
England and Wales restructured their old bankruptcy laws through the Bankruptcy Act of 1883. The act made bankruptcy a public affair and no longer only between debtor and creditor.
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History
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Before the Bankruptcy Act of 1883, insolvency was a criminal offense. Creditors were allowed to seize the debtor's property or even have him imprisoned. Traders who committed fraud and went bankrupt as a result faced the death penalty.
The Bankruptcy Act of 1883
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Dissatisfaction in the handling of bankrupt estates led to passage of the Bankruptcy Act of 1883. The act ensured that each bankruptcy was examined by an impartial public official called an official receiver. Though bankruptcy was no longer a crime, the act made it a public affair and the bankruptcy underwent a public examination. This kept the debtor from engaging in public activities or trading because it revealed who could be trusted and who could not.
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Certificate of Misfortune
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Though rarely granted, if the courts believed the bankruptcy was caused by misfortune and not misconduct, they could give the debtor a certificate of misfortune. This was an attempt to distinguish between bankruptcy resulting from irresponsibility and bankruptcy due to an accident.
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