January 7, 2014
Did you ever wonder about Bankruptcy Laws in ancient Times? Or how we got the word “bankruptcy”?
The meaning of bankruptcy – derived from Italian banca rotta, meaning “broken bench”, which may stem from a custom of breaking a moneychanger’s bench or counter to signify his insolvency, or which may be only a figure of speech.
- Bankruptcy did not exist.
- If a man owed and he could not pay, he and his wife, children or servants were forced into debt slavery, until the creditor recouped losses through their labor.
- Usually there was a limited period of 5 years for debt slaves.
- Servants of the debtor could be retained beyond the 5 years and sometimes a lifetime.
- Athens was an exception, laws forbid enslavement for debt; as a consequence, most Athenian slaves were foreigners (Greek or otherwise).
- Every 7th year decreed by Mosaic Law as Sabbatical year when the release of all debts that are owed by members of the community (not “foreigners”) was mandated.
- The 7th Sabbatical year, or 49th year, was then followed by another Sabbatical year known as the Year of Jubilee where the release of all debts was mandated, for all (fellow community members, foreigners and the release of all debt-slaves).
- According to the Qur’an, an insolvent person was deemed to be allowed time to be able to pay out his debt. Verse 280, which notes: “And if someone is in hardship, then let there be postponement until a time of ease. But if you give from your right as charity, then it is better for you, if you only knew.“