Why  authors of the Texas Constit. provided bankrupts such protection from creditors when most of the authors were wealthy creditors themselves?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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In general, people who are concerned about business and the economy think that it is important to protect people from creditors (to some extent) when they go bankrupt.  It is believed that providing such protections makes people more willing to take the risks that are needed in order for economic growth to occur.

If you think about it, people take major risks when they open a new business.  They are putting their fortunes at risk.  But think how important new businesses can be for our economy.  What if Bill Gates hadn't taken the risk to create Microsoft, for example.  So people think it is important to encourage people to take risks and start new firms.

Providing bankruptcy protection is one major way to encourage risk.  If you can start a new firm without having to worry about losing everything you own, you are way more likely to try it.

So, just because someone is wealthy doesn't mean they would not care about bankruptcy protection.  They would want to encourage it so as to make it easier for entrepreneurs to start businesses.

 

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