persuade a customer who is unable or unwilling to pay, and yet too much delay may involve loss. Many solvent debtors are merely indifferent and negligent, but if you have used all approved methods, and there is a question about the solvency of the debtor, you should either undertake to collect through your own collection agency, as outlined in Part III, or place the account with some public collection agency for prompt attention, which can give nearly as good service and in whom you have almost as much confidence as you would in a collection agency operated by yourself.

CHAPTER V

BANKRUPTCY

Every collector should be familiar with the operation of the bankruptcy law, not necessarily with all the technical procedure of the bankruptcy court, nor with the legal problems involved in contested matters, but he should be especially interested in the practical operation of the law, its purposes, how it is applied and some of the effects of its application.

The bankruptcy law is founded upon the equitable maxim that "equity is equality" and upon the principle of expediency and the highest regard for the greatest number. The whole theory of the bankruptcy law is that each creditor of the unfortunate bankrupt shall share alike rather than that some one creditor or class of creditors will have an advantage over another creditor or class of creditors. Of course, the creditors of the bankrupt are classified particularly as between those who are secured and those who are unsecured, and it should be the supreme effort of every collector to be in the secured class if bankruptcy intervenes.

There has been a great deal of criticism on the part of some as to the operation of the bankruptcy law, but it would seem that much of this criticism is due partly

to the fact that creditors take very little interest in the bankrupt's affairs after the petition is filed. They all seem to think that matters will run along themselves, and as long as every one is to share and share alike no particular attention is paid to the administration of the estate by the creditors, and it is to endeavor to correct this mistaken practice that this chapter is largely directed.

In many instances the effects of the bankruptcy court are disappointing and this is felt more keenly by the creditor, because after having had his confidence in the debtor shaken by reason of the debtor's failure himself, he is doubly disappointed in having had his confidence in the bankruptcy court apparently misplaced when judged by the results in the administration of that particular estate. Often the creditor hopes to receive a large dividend and expects complete redress in the bankruptcy court, and frequently having reason to believe there has been fraud practiced concludes that the debtor will be sent to the penitentiary. Very often if the debtor should be subjected to some criminal penalty the very creditors who could furnish the evidence do not show enough interest in the case to produce the proper evidence.

That there are abuses of the bankruptcy law there can be no question, but its passage has certainly taken away the fear of fraudulent transfers and bills of sale and "midnight mortgages." Any of these fraudulent

moves can be set aside by the operation of the bankruptcy laws by an involuntary petition if acted upon within the time prescribed. Since the passage of the law there can be no more pell-mell attachments, fraudulent conveyances, preferential transfers, favored receiverships, assignments, executions or chattel mortgages that are designed to benefit some creditors at the expense of others, or to benefit the debtor at the expense of his creditors at large.

The bankruptcy law is a credit man's law and its primary object is the equal distribution of the assets of the bankrupt. The law when first enacted, immediately after the Civil War, was primarily to discharge any honest and deserving citizens from a burden of debt which they could never hope to overcome under ordinary conditions, but the law of 1898, now in force, is built upon a solid foundation, and has for its purpose the advancement of commerce and the encouragement of trade through reasonable, honest venture.

Occasionally we hear of the whole law being condemned because of some individual case that was improperly handled, or through which there disappeared much of the assets. It seems to be a trait of human nature to condemn and to affect a superior disdain for subjects which are mysterious or shrouded in darkness, and, frankly, it is the author's belief that much of the opposition to the bankruptcy law among credit men and lawyers is the general lack of information as to

the provisions of the law, the procedure to be followed and the part that the creditor must play in the affairs of the bankrupt at certain times during the administration of the estate.

The average case works out about like this. Some collection agency or attorney writes or telegraphs to the firm a communication which is referred to the collection department or to the credit man, stating that a certain concern has just filed a petition in bankruptcy, or that one is just about to be filed, either voluntary or involuntary. This letter usually intimates that the informant has some first information and that instant action is necessary and the impulse is to promptly accept the invitation and send the requisite authority to a stranger or to one whose motives are wholly unknown to the creditor and whose integrity or policy of doing business is likewise unknown to the creditor.

There is no reason in the world why it is necessary to respond to these requests promptly. The collector or credit man has ample opportunity to fully investigate the case, as there is no advantage gained by filing a claim promptly or by delegating a power of attorney to one who has not been investigated, for the reason that it will be at least thirty days before even the first meeting of creditors can be held to elect a trustee. It is desirable, of course, for a creditor to file his claim so that he may vote for a trustee and in that way join with the other creditors in electing a trustee who is