Jewish and American Bankruptcy Law: Their Similarities, Differences and Interactions

Abstract

The Jewish approach to debtor-creditor law is distinguished for its early, pro-debtor features, including (1) a debtor's immunity from involuntary labor, imprisonment and corporal punishment; (2) a debtor's right to certain exempt property; (3) a debtor's protection from creditor harassment; and (4) basic support of a debtor's financial rehabilitation. Even in this twenty-first century, some countries have not fully adopted these laws.

American law did not initially share Jewish law’s pro-debtor approach, but it has evolved so that its “fresh start” policy exceeds the benefits provided debtors under Jewish law. The two systems currently differ significantly as to the moral obligation to pay certain types of debts and as to the availability of a bankruptcy discharge. This article not only examines these similarities and differences, but also explores the ways in which the systems interact, focusing specifically on whether a secular bankruptcy discharge would be valid as a matter of Jewish law.

Keywords: bankruptcy, debtor, creditor, debtor's prison, corporal punishment, fresh start, Jewish, comparative law, discharge, biblical, commercial law