# Domestic Encyclopædia (1802)/Bankrupt

Edition of 1802.
​BANKRUPT, an appellation given to a person whose bank or stock is exhausted: the word is derived from the French, banque-route, which signifies a breaking or failing in affairs of fortune.—From the description given of a bankrupt in our statute-books, he may be defined, "a trader who secretes himself, or does certain other acts tending to defraud his creditors."
The present system of bankrupt-laws is calculated for the benefit of commerce, and founded on the principles of humanity and justice. Hence they confer some privileges not only on the creditors, but also on the bankrupt or debtor himself; for, by taking into consideration the sudden and unavoidable accidents to which a person engaged in trade is liable, they not only grant personal liberty, but likewise pecuniary assistance, to men in this unfortunate situation; on condition that they surrender their whole estate, to be divided among their creditors. The benefit of the bankrupt-laws, however, are allowed to none but actual traders, as these are in general the only persons subject to accidental losses, and to an of discharging their debts without any fault of their own. But, when other individuals contract debts, the law renders them subject to the consequences of their own indiscretion.
By the statutes of this country, a man makes himself a bankrupt in consequence of the following acts:—1. By departing from the realm, with intent to defraud his creditors; 2. By leaving his house with intent to secrete himself for the same purpose; 3. Remaining in his house so as not to be accessible to his creditors; 4. Procuring or suffering himself willingly to be arrested, outlawed, or imprisoned, without a just and lawful reason; 5. Causing his money or effects to be sequestrated by any legal process; 6. Making any fraudulent conveyance to a friend, which is an act of the same suspicious nature as the last; 7. Procuring any protection to screen his person from arrests, though not entitled to that privilege by an act of parliament; 8. Endeavouring, by any petition to the King, or by a bill against any creditors, to compel them to take less than their just debts, or to procrastinate the time of payment; 9. Lying in prison for more than two months upon arrest, or other detention for debt, without finding bail; 10. Escaping from prison after an arrest for a just debt of one hundred pounds and upwards; 11. Neglecting to make satisfaction for any just debt to the amount of one hundred pounds, within two months after service of legal process for such debt, upon any trader enjoying the privilege of parliament.
Sir John Holt maintained, that a man's removing his goods privately, to prevent their being seized in execution, was no act of bankruptcy; as the statutes mention only fraudulent gifts to third persons, and causing them to be seized by sham-process, in order to defraud creditors. It has also been expressly determined, that a banker's stopping, or refusing payment, is not an act of bankruptcy; ​because there may be good reasons for such conduct, as a suspicion of forgery, &c. If, in consequence of such refusal, he is arrested, and puts in bail, it is still no act of bankruptcy; but, if he goes to prison, and remains there two months, then, and not before, he becomes a bankrupt.
The consequences resulting from the unfortunate situation of a bankrupt, will be concisely stated under the article Commission of Bankruptcy.