24 Jan Bankruptcy Is Allowed Under the United States Constitution.
Congress is empowered by the Constitution of the United States of America (Article I, Section 8, Clause 4) to enact bankruptcy laws. Congress has used that power to create a bankruptcy code which governs how bankruptcy will be applied in America. One of the most powerful features in the bankruptcy code is the automatic stay imposed by creditors after the filing of a bankruptcy petition. This means that creditors cannot contact individuals who have filed for bankruptcy protection, and if they persist and contact those individuals they can be held in contempt of court.
Bankruptcy being part of the U.S. Constitution indicates that the founding fathers thought it was important for people to have a way to get rid of their debts and start fresh. This reasoning probably came about from the debtors prisons that happened in Europe and they wanted to avoid debtors prisons in the United States. In some instances we have had creditors who are angry that they are not being paid back what they are owed and that is understandable, but the bankruptcy option is also available to those creditors, should they ever experience financial hardship. Bankruptcy is part of America because of its inclusion in the Constitution and it is available to help when people or corporations need a chance to start fresh.