Federal Judicial Center

One Columbus Circle NE

Washington DC 20002-8003

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www.fjc.gov

1787

The U.S. Constitu-

tion (Article I, 

sec. 8) autho-

rizes Congress to 

establish uniform 

bankruptcy laws 

throughout the 

nation. Laws 

passed in the suc-

ceeding century, 

however, will be 

short-lived.

1841

Bankruptcy Act of 1800 (2 

Stat. 19) passes by one vote. The 

first federal bankruptcy law, the 

Act authorizes district court judges 

to appoint nonjudicial commission-

ers to oversee and help administer 

bankruptcy proceedings. Applying 

solely to merchant debtors with 

cases initiated by creditors, the

Act allows discharges only if 

two-thirds of creditors (in number 

and dollar amount) agree. The Act 

contains a five-year sunset provi-

sion, in accordance with existing 

English law.

1839

Federal law

(5 Stat. 321) abol-

ishes imprisonment 

for debt.

Bankruptcy Act of 1841

(5 Stat. 440) grants district 

courts “jurisdiction in all 

matters and proceedings in 

bankruptcy,” including develop-

ing rules for proceedings and 

appointing bankruptcy com-

missioners and assignees. In 

addition, the Act •allows voluntary cases •extends relief to all debtors •allows discharge of debtors 

who turn over assets

•provides for recovery of 

fraudulent transfers and 

preferences

•prohibits debtors from

using state law exemptions

1843

High administrative 

costs, lack of state 

law exemptions, and 

creditor frustration 

lead to the 1841 

Act’s repeal.

1800

1803

Citing excessive costs and cor-

ruption, Congress repeals the 

Act of 1800. For the next three 

decades, the states will fill the 

legal void. In 1819, the U.S.

Supreme Court bars states 

from discharging debts to 

citizens of other states.

Introducing 

“Swedish 

Nightingale” 

Jenny Lind to 

U.S. audiences, 

promoter P.T. 

Barnum soon 

builds a vast 

fortune. He 

will file for 

bankruptcy in 

1877.

1850

Edgar Allan Poe

publishes “The

Raven,” seal-

ing his fame. 

Financial woes 

will dog the 

author till his 

death four 

years later.

1801 1845

Thomas

Jefferson

(1743–1826) 

begins his first 

term as

President.

1819

When a Kentucky business 

venture fails, 

John James 

Audubon is sent 

to debtor’s 

prison. On 

release, he will 

embark on his 

celebrated bird 

painting series.

Considered 

criminals, bankrupt individuals 

in colonial 

America were 

commonly

imprisoned. 

The Articles of 

Confederation 

had no provi-

sions for bank-

ruptcy law.

1798

Impoverished 

by speculation, 

Revolutionary 

War financier 

Robert Morris

is sent to debtor’s prison. 

(Congress 

enacts the first 

bankruptcy law 

in part to get 

him out.)

1777

NAMES & FACES

American Numismatic Society 

Federal

Judicial

Center

This unique bankruptcy time line maps the

evolution of bankruptcy law since its inception in

1787 in the U.S. Constitution through 2011. It also

provides statistics demonstrating the burgeoning

bankruptcy caseloads, and historical snapshots

of select events that occurred along the way.

Additional information can be found on the

Center’s websites. Suggested by the bankruptcy

courts and advisory committees, this time line

is the product of a long-term collaboration

between bankruptcy judges, court staff, the

Administrative Office of the U.S. Courts, and

the Federal Judicial Center. 

a time line

The

Evolution

of

U.S.

Law

The

Evolution

of

U.S.

Bankruptcy

Past perceptions Law

Bankruptcy as Bluebeard. “Puck,” 1913.
1898 1938 1978

Bankruptcy Act of 1867

(14 Stat. 517) marks the first time 

Congress refers to district courts as 

“constituted courts of bankruptcy” with 

original jurisdiction in all bankruptcy 

matters. The Act notably foreshadows

today’s debtor-friendly Chapter 12 and 

13 provisions by introducing the “composition agreement” allowing debtors and 

creditors to negotiate repayment—often 

for less than full compensation. Other 

key provisions of the Act include

•allowing district judges to appoint 

nonjudicial assistants, known as 

“registers in bankruptcy,” nominated 

by the Chief Justice

•allowing debtors to choose between 

state and federal exemptions

•requiring creditor consent to discharge, or payment of a 50% dividend

1874

Congress amends the 1867 

Act so that debtors can create 

a plan for distributing assets 

among creditors as a way to 

settle a case.

1878

In response to abuses and excessive fees, Congress repeals 

the Acts of 1867 and 1874.

1867

7,345

1868

29,539

1869

5,921

Bankruptcy Act of 1898

(30 Stat. 544) is the first long-term bankruptcy legislation. In effect for the next 80 years, 

the Act establishes the position of referee to 

oversee administration of bankruptcy cases. 

Referees are appointed to two-year terms by 

the district judge and can be removed only 

for incompetency, misconduct, or neglect of 

duty. They are paid a percentage of funds 

brought into the estate. Besides the referee 

position, the 1898 Act establishes the office of 

trustee (previously assignee) in bankruptcy. 

In general, the Act is perceived as pro-debtor, 

establishing relatively narrow exceptions

to discharge. Corporations are ineligible for 

voluntary relief, but

some can be involuntary debtors. (Amendments enacted in 1910 

make corporations eligible 

for voluntary bankruptcy.)

1899

22,446

1932

70,049

1933–1934

Amendments to the 1898 Act allow reorganization

for railroads and corporations as well as individual

debtors. Congress crafts the first

municipal bankruptcy laws. 1936

On grounds of

unconstitutional interference with state sovereignty, Congress repeals the 1934 Act.

1932

The National Bankruptcy Conference is

created to study bankruptcy

reform.

1961

125,830

1937

Congress passes the revised Municipal Bankruptcy Act. Upheld by the 

Supreme Court, the legislation will come to be

known as Chapter 9

bankruptcy.

Chandler Act of 1938

(52 Stat. 840, 841), an 

overhaul of the 1898 Act, 

reworks previous reorganization amendments into 

“Chapters”: Chapter X for 

corporate reorganizations, 

Chapter XI for arrangements, 

Chapter XII for real property 

arrangements, and Chapter 

XIII for wage earner plans.

1867

1946

Compensation of referees is changed from a fee 

to a salary basis.

1964

Congress authorizes promulgation of 

the Supreme Court’s Bankruptcy Rules.

1970

Amendments to the 1898 Act give referees

jurisdiction to determine the effect of bankruptcy 

discharge. In addition, Congress creates the

Commission on the Bankruptcy Laws of the United 

States to recommend changes to the laws reflective 

of current social and economic conditions.

1986 1994 2005

CASES FILED

2010

1983

374,734

1990

725,484

2000

1,597,462

2006

617,660

2010

1,593,081

Bankruptcy Reform Act of 1978

(92 Stat. 2657), superseding the 1898 

Act, establishes bankruptcy courts in 

each district and allows for separate 

bankruptcy judges, appointed by the 

President and confirmed by the Senate, 

to serve 14-year terms beginning in 

1984. While bankruptcy courts may now 

hear all matters arising in or related to 

bankruptcy cases, judges remain nonArticle III adjuncts of the district

courts. Also, a new Chapter 11 (re-

 placing X, XI, and XII) and Chapter 13, which offers a “super” discharge, make filing and reorganizing easier for businesses and

individuals. (Western rather than

Roman numerals are adopted

for chapter titles.) The following

year a pilot U.S. trustee

program is established.

1982

In Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 

the Supreme Court declares the broad delegation of jurisdiction to bankruptcy courts unconstitutional. The Court stays 

its decision until October 4, 1982, to give Congress time to 

respond. When Congress fails to meet an extended

deadline, 

the Judicial 

Conference and 

Administrative 

Office propose 

an Emergency 

Rule allowing 

the bankruptcy 

system to continue operation. 

Though adopted, 

the fix causes 

many problems, 

including delay of 

judges’ pay.

Bankruptcy Judges, United States Trustees, and 

Family Farmer Bankruptcy Act of 1986 (100 Stat. 3088) 

establishes Chapter 12 temporarily for family farmers and makes permanent the U.S. Trustee program except in North Carolina and Alabama, where bankruptcy administrator programs are

established. The trustee

program moves the appointing and overseeing of case

and standard trustees from

the judicial to the executive

branch in participating districts.

Bankruptcy Reform Act of 1994

(Public Law 103-394) creates the second National Bankruptcy Commission to 

investigate changes in bankruptcy law. 

The Act expands bankruptcy courts’ 

ability to hold jury trials in some proceedings and encourages circuit councils 

to establish bankruptcy appellate panels.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 

(Public Law 109-8), substantially amending the 1978 Act, establishes a means test 

based on state median income for individual debtors, makes a briefing on credit counseling availability a condition for relief, and requires financial management training

for Chapter 7 and 13 debtors to obtain a discharge. In addition, the Act

•appears to require dismissal if required documents are not filed (courts

have not all interpreted this in the same way)

•eliminates the Chapter 13 “super discharge”

•eliminates “strip down” on most

automobile loans in Chapter 13

•allows waiver of the bankruptcy

filing fee for Chapter 7 individual

debtors meeting certain criteria

 •allows direct appeals to the court

 of appeals in certain circumstances.

The Act also makes Chapter 12 permanent (and includes “family fishermen” with farmers); creates the role

of consumer privacy ombudsman;

and incorporates a model law on

international insolvency cases.

Dodd-Frank Wall Street Reform and

Consumer Protection Act of 2010 (Public Law 

111-203) aims to promote the nation’s financial stability by 

improving accountability and transparency in the financial 

system, ending bailouts, and protecting consumers from 

abuses by financial services. The Act establishes an orderly 

liquidation process for covered financial companies subject to 

FDIC regulation under the Act and establishes the Consumer 

Financial Protection Bureau to

•make rules and enforce laws

•restrict unfair, deceptive, and abusive practices

•promote financial education

•monitor financial markets for new risks to consumers

1973

Per the Supreme Court’s 

Rules of Bankruptcy Procedure, referees henceforth are 

known as bankruptcy judges 

and are conferred finality on findings.

The Commission

on Bankruptcy

Laws submits

its report, including draft

legislation.

1983

The Supreme

Court promulgates the

Bankruptcy

Rules and Official Forms to

govern bankruptcy

proceedings under

the 1978 Act.

1984

Congress passes the Bankruptcy Amendment and Federal 

Judgeship Act (98 Stat. 333), which replaces the 1978 provisions dealing with jurisdiction, venue, jury trials, and appeals. 

Bankruptcy courts become units of the district courts, with 

jurisdiction by district court reference. The circuit courts are 

authorized to appoint bankruptcy judges to 14-year terms. 

Bankruptcy courts are authorized to enter final orders on

core matters, with noncore matters subject to de novo rule

by the district court, absent consent of the parties. 1998

Congress passes the Religious Liberty and

Charitable Donation Protection Act of 1998, amending several sections of the 1978 Act to limit the trustee’s power to avoid debtor transfers to charities and 

churches of up to 15% of gross annual income. For Chapter 13 cases, a 15% income threshold is used to determine reasonableness of claimed charitable contributions.

2008

Facing the disastrous bankruptcy of Lehman

 Brothers Holdings Inc. plus American

 International Group’s (AIG’s) immi-

 nent collapse, Congress passes the Emergency

 Economic Stabilization Act of 2008 (Public Law 110-

 343), creating the Troubled Assets Relief Program to

 pump money into the financial and automotive indus-

 tries to stabilize them during a worldwide credit crisis.

2009

Congress passes

the Credit CARD

Act (Public Law 111-24), which

prohibits certain unfair and abusive

practices and makes credit card rates

 and fees more transparent.

2006

In Central Virginia Community College v. Katz, the

Supreme Court rules that

the Article I Bankruptcy

Clause abrogates state

sovereign immunity in

private suits.

2011

In Stern v. Marshall, the Supreme Court rules

 that bankruptcy judges lack the

 constitutional authority to

enter final judgment based

entirely on a state law

 counterclaim by a debtor

 against a claimant, a power

 reserved for Article III

 judges.

1997

The National Bankruptcy Review Commission recommends direct appeals from the bankruptcy courts to the 

courts of appeals and changing bankruptcy courts to 

Article III courts. The commission is defunct as of November 19. Congress disregards most of its recommendations.

1860

Abraham

Lincoln (1809–

1865) is elected

President.

In a rematch, 

Joe Louis, aka 

the “Brown 

Bomber,” 

defeats Max 

Schmeling in 

two minutes, 

four seconds.

1938

Samuel

Clemens, aka 

Mark Twain,

publishes 

“Huckleberry 

Finn” to wide 

acclaim. A 

company 

formed by the 

author will file 

for bankruptcy 

ten years later.

1884

Ford Motor Co. 

rolls out the 

Model T, putting 

ordinary

Americans in 

the driver’s 

seat. (Founder 

Henry Ford’s 

first two automobile companies failed.)

1908

Eddie Cantor 

stars in Florenz 

Ziegfeld’s 

famous Follies. 

By 1930, bad 

investments 

and free spending will leave 

The Great

Ziegfeld

bankrupt.

1917

Harry S. Truman

(1884–1972) 

assumes the 

Presidency 

when

Roosevelt

dies 82 days 

into his fourth 

term.

1923 1945

Lois Wilson 

stars in Paramount’s “The 

Covered Wagon.” Meanwhile 

Walt Disney’s 

Laugh-O-Gram 

Studio files for 

bankruptcy (as 

will Paramount 

in 1932).

1881

Ulysses S. 

Grant (1822–

1885), retired 

general and

former President, joins an 

investment 

banking partnership. Three 

years later a 

swindle will 

ruin him.

1953

Leontyne Price 

dazzles crowds 

in “Porgy and 

Bess.” Oscar 

nominee

Dorothy

Dandridge will 

play Bess in

the 1959 film 

version.

1999

In existence 

since 1851, 

The Singer 

Company files 

for Chapter 11 

bankruptcy protection, partly 

as a result of 

global shifts in 

garment manufacturing.

1989

Unable to compete following 

industry

deregulation, 

Eastern Air 

Lines files for 

bankruptcy protection. Its

last flight will 

be in 1991.

With public

interest in 

trains dying, 

toy maker 

Lionel

Corporation

files for

bankruptcy.

A reconfigured 

Lionel will file 

again in 1991.

1967 2001

Having lost 

ground to

foreign

competitors,

Bethlehem 

Steel files for 

bankruptcy 

after nearly 

150 years in 

business.

1972

President

Richard M.

Nixon (1913–

1994) wins 

reelection, 

beating George 

McGovern in a 

landslide.

1902

The highly 

successful (but 

quite different) 

stage version 

of L. Frank 

Baum’s “The 

Wonderful

Wizard of Oz” 

opens in

Chicago.

1950

Lee De Forest, 

inventor of the 

Audion vacuum 

tube, publlishes 

“Father of the 

Radio,” his life 

story. 

1962

Partly due to 

the failure of 

its unreliable 

Predicta line, 

radio and TV 

maker Philco 

is forced to file 

for bankruptcy.

1979 2002

As ever more 

customers 

flee to big-box 

discounters, 

Kmart Corp. 

files for bankruptcy protection. “Big K” 

will emerge as 

Kmart Holdings 

Corp. the following year.

Owens-Corning

Corp. emerges 

from Chapter 

11 when its 

reorganization 

plan becomes 

effective on 

October 31.

2006

To avoid bankruptcy, Chrysler 

Corp. petitions 

Congress for $1 

billion in loan 

guarantees.

Slow to keep 

up with new 

mail and internet delivery 

trends, video 

rental pioneer 

Blockbuster 

Inc. files for 

bankruptcy.

2009 2010

In business 

more than 100 

years, General 

Motors Corp.

files for Chapter 11 reorganization with 

government 

funds to avert 

liquidation.

2011

The Los Angeles Dodgers file 

for Chapter 11 

protection.