Until recent times, many countries treated an insolvent debtor pretty harshly. From 1603 to 1625, while King James I ruled in England, a debtor who was unable to satisfactorily explain his insolvency was subjected to ridicule in the public pillory.

During at least one period in Ancient Rome, creditors were entitled to enslave the debtor as well as his family.

As trade and commerce developed, steps were taken to ease these severe treatments.

In 1800 the U.S Congress adopted the first national bankruptcy law. It has been amended throughout the years and today's bankruptcy law as we know it is based on the Bankruptcy Act of 1978. Its intention is to give individuals or businesses a fresh start when necessary. Although bankruptcy law has been modified to some degree since 1978, it essentially remains the same.

Filing for bankruptcy does relieve a person from the obligation of paying many debts but there are also nondischargeable debts. This is indebtedness which the person is still responsible for even after filing bankruptcy. In recent years many people have mistakenly turned to bankruptcy as a "quick fix" for their financial woes. However, some have discovered that many difficulties can still lie ahead.