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Bankrupt in AmericaA History of Debtors, Their Creditors, and the Law in the Twentieth Century$
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Mary Eschelbach Hansen and Bradley A. Hansen

Print publication date: 2020

Print ISBN-13: 9780226679563

Published to Chicago Scholarship Online: September 2020

DOI: 10.7208/chicago/9780226679730.001.0001

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The Intended and Unintended Consequences of the 1898 Bankruptcy Act

The Intended and Unintended Consequences of the 1898 Bankruptcy Act

(p.30) Chapter Two The Intended and Unintended Consequences of the 1898 Bankruptcy Act
Bankrupt in America

Mary Eschelbach Hansen

Bradley A. Hansen

University of Chicago Press

Chapter 2 examines the origins and consequences of the 1898 Bankruptcy Act. The authors of the law were business owners who wanted an efficient procedure to deal with the failure of other businesses. They gave little thought to personal bankruptcy, and the law that they designed for businesses erected no substantial obstacle to the discharge of consumer debt. As access to consumer credit expanded, personal bankruptcy grew both relative to business bankruptcy and in absolute terms. However, personal bankruptcy did not grow evenly across the U.S. Households sought the protection of bankruptcy law mainly in states where garnishment of wages was easy. The growth in personal bankruptcy led to a shift in beliefs about the causes of bankruptcy and the purpose of bankruptcy law. Initially, creditors, debtors, legislators, judges and other legal professionals agreed that the purpose was to satisfy the claims of creditors efficiently. By the end of the 1920s, many interested parties stressed the importance of providing relief to debtors, who were portrayed as victims of unscrupulous creditors such as loan sharks. The increase in bankruptcy also led to changes in organized interest groups. Legal professionals began to work alongside creditors to try to shape the law.

Keywords:   garnishment, loan shark, 1898 Bankruptcy Act, interest groups, legal professionals, consumer credit

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