While some from of bankruptcy has existed since Roman times, the first permanent United States bankruptcy statute wasn't established until 1898. Debtors' prisons existed until the 1840s, but the Supreme Court said that such an arrangement violated the Constitution. At first, bankruptcy laws were designed to protect businesses. However, individuals may also find relief from debt by filing under certain chapters.
It may be in the best interest of both a debtor and a creditor to settle a debt outside of bankruptcy court. This is because it can be faster and less expensive to resolve the matter as well as easier to come up with a creative solution without a court order. In the event that a debtor does decide to file for bankruptcy, it is better to do so with an attorney. This is because the process can be complex and overly technical for someone who lacks formal legal training.