“Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" or "reorganization.” http://www.nolo.com/lawcenter/ency/article.cfm/ObjectID/1FF752C2-0C80-4539-8B159557A55CC17D/catID/283B9600-ECC3-49ED-9D9A20A3E13F42E0
Congress passed several bankruptcy laws during the nineteenth century; America did not have a permanent bankruptcy law until 1898. The driving force behind the 1898 Act was creditors. Business organizations such as chambers of commerce and local boards had begun to form in the late 19th century and, under the auspices of an umbrella group they called the "National Convention of Commercial Bodies of the United States," creditors pushed for a federal bankruptcy law throughout the 1880s and 1890s. Business groups wanted a federal bankruptcy law because they believed that state laws enabled debtors to discriminate against out-of-state creditors.
Creditors were fiercely opposed by a group of lawmakers, many of whom represented southern and western states, who feared that federal bankruptcy laws would hurt farmers, and that the administration of bankruptcy would require a vast new federal bureaucracy. The 1898 Bankruptcy Act represented a compromise between these two perspectives. The law was passed, but the law also made it relatively easy for debtors to discharge their debts; and pared down the administrative structure to an absolute minimum.
Perhaps the most important effect of the 1898 Act was that its scaled down administrative structure created an enormous need for a bankruptcy bar. In striking contrast to English bankruptcy law, the U.S. system was run by the parties-rather than a governmental official, and each of the parties relied on lawyers.
The next major movement to reform bankruptcy law commenced in 1929, with an extensive investigation that led to the Donovan Report in 1931, and to proposed legislation the following year.................
