The centuries-old idea that bankruptcy is something criminal is still alive and kicking. It continues to tarnish insolvents despite the spirit of reform which has, for most of the time, had the upper hand in the legislative process.1 Since it is evident that criminals ought to be punished, and relieving a debtor from her burden does not exactly sound like a punishment, the heritage of incrimination makes discharge look doubtful. Should we have harsh bankruptcy practices in order to teach the insolvents a lesson in pecuniary decency? The search for an answer will start from general theories of punishment. It will then proceed to examine whether insolvencyrelated fraud, recklessness, negligence and bad judgement should carry penalties. In the end the deterrent effect of punitive bankruptcy laws will be assessed.