Bankruptcy and the Bible
Let me preface this by saying, while I have been in deep debt, I have never been to the point where I couldn’t pay my bills. I have had some people really close to me go through it and I have seen how scary it can be. Just remember that you always have hope in God. He said that He will never leave you or forsake you - ask Him for help.
What does the Bible say about bankruptcy?
God’s laws supercede national and local laws. Just because you can go to Las Vegas and legally get a hooker, doesn’t mean that it is okay with God. The tough truth is that bankruptcy seems to work the same way. Just because it is legal, doesn’t mean that God approves of it.
Psalm 37:21
The wicked borrows and does not pay back, but the righteous is gracious and gives.
Ecclesiastes 5:5
It is better that you should not vow than that you should vow and not pay.
The problem with bankruptcy is that it is the Government who is saying that you are off the hook with your bills. In most cases the businesses that you owe money to probably would still like to collect payment. It is actually doing a great disservice to the companies that you owe money to. Essentially, the borrower/buyer made a promise to pay, but is allowed (via bankruptcy) to break the agreement.
I remember a guitar I sold for $800 and agreed to let the buyer pay me in installments. I ended up only receiving $400 from the buyer only to never see him again. Everyone has stories like these and knows that it’s not fun when someone doesn’t hold up their end of the bargain.
When someone files for bankruptcy, this is basically what is happening to each of the businesses that are expecting payment. While I am sure most of them are credit card companies and other lending institutions, it is not an excuse for doing something wrong.
If the businesses themselves forgave the debt, it would be a different story. Realistically, this is rarely the case.
I am drowning in debt and bankruptcy is my only option!
God is great at getting us out of tough situations that we get ourselves into. Ask Him for help and He will not let you down. And be prepared to to fight to get out of debt, because it is going to be a fight. Just because God is helping you doesn’t mean that it is going to be a walk in the park. But you can be assured that if you do it God’s way (even though it may take longer) you will be greatly rewarded! It is worth it.
As far as practical steps I would read articles about getting out of debt, go to the library and read Dave Ramsey’s Total Money Makeover. That book has been a tremendous help to many people who thought that bankruptcy was the only way out.
What about bill consolidation companies?
I would suggest trying to avoid them as well. That said, definitely do a bill consolidation rather than filing bankruptcy. But still avoid it if at all possible. The reason is that most of the bill consolidation companies negotiate with your lenders to get your payments lowered which is nice, but there are a few problems here.
- It is only a temporary fix to the problem. If you don’t put that freed up cash to good use, you are going to be worse off then you were before.
- The bill consolidation company has to get paid to. This is just another hand reaching in the pot wanting to get paid.
- You can negotiate with (at least some of) the lenders yourself. Yes, they negotiate with lenders all the time so they are probably better at it than you will be, but it is worth trying. Believe me, lenders want to get paid something rather than nothing. So, if you communicate with them and put forth a good faith effort, most of them are going to work with you. Give it a shot, you have nothing to lose.
I would love to hear your comments about bankruptcy. Am I missing any Bible verses that suggest something different?
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Filed under Biblical Perspective on Money, Ways to get out of Debt
Comments on Bankruptcy and the Bible »
What about the bankruptcy that requires you to payback your lenders?
I think that is a worst case scenario and consolidation should be tried first, but sometimes it takes something pretty dramatic to make you change.
@Cross
Yea, I should have clarified… I think Chapter 7 bankruptcy is the common one where your debts are discharged.
And I believe it is Chapter 11 and 13 that are more of a “let’s work out a deal to get this paid back.”
I think the point is to pay the money back. So if it is a Chapter 11 and the money gets paid back to the lender, then in my mind, all is good. I would like to hear other opinions on this issue…
My opinion on the whole subject is this - if you borrow money you should pay it back. Preferrably pay it back as fast as possible.
As for me and my house we try not to borrow period - we try to save up for things that we want, and only buy them when we have enough! Good way to avoid bankruptcy!
I know a man very close to me who filed bankruptcy over 20 years ago. It was a bad situation. My friend persuaded his parents to take out a mortgage to start a business with a partner. Soon afterward, this “can’t-lose” business starting bleeding money profusely.
The business partner only covered about 10% of his share of the losses.
Facing the prospect of losing his parents’ house, he declared bankruptcy. However, his problems did not end there. He had to affirm the loan on his parents house in order to stave off foreclosure. After almost 10 years, he paid off the second mortgage. During that time, he made tremendous sacrifices,reduced his standard of living, and committed the “excess” to paying down the loan.
The good news out of all this is that during the severe depression he experienced, he realized his need for a saviour and made Jesus the Lord of his life. His life has changed dramatically — financially and otherwise — for the better.
While he regrets the financial hardship he put his parents through, he does not regret the outcome. His parents are glad that he came into the Kingdom.
There can be life after bankruptcy. In my friend’s case, it is ETERNAL life!
@BMM
I agree, that is my plan of attack too…
@CoolHappy
You are absolutely right that there is life after bankruptcy, and that reminds me of something I maybe should have added… That just like any other mistakes that happen in our lives (as a result of our actions or someone elses) God fixes and forgives! So the point of the article was meant to be an avoid-this-at-all-costs and not a condemning of those who have done it.
Oo if someone is feeling shamed or HOPELESS, then it is not from God. God’s mercies are new every morning and there is ALWAYS hope in God!!
Hi Bob,
I do agree with the fact that people should not get in over their heads. Lets face it, a lot of bankruptcy is brought on by bad choices. Some overwhelming debt is brought on by things out of our hands like severe illness, death of a spouse, ect… There is no easy yes or no answer for these situations.
In the case of bankruptcy these verses should also be considered:
“At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD’s release” (Deuteronomy 15:1-2). This is actually where “Chapter 7″ got its name. There is also the parable of the King who forgave the debts of his servant in Matthew 18. But I think this is the best example of bankruptcy: our own debt being resolved by Christ. Christ paid the ultimate price because we owed a debt we could not pay, so please don’t think that God doesn’t believe in bankruptcy, He invented it.
Now does this mean that we should run around and file bankruptcy if we don’t really need to? If we can afford to absolve our debts of course we should! It does not give us the right to run around and deliberatley be irresponsible because we can always declare bankruptcy later, just as we don’t go around sinning all day long because we can pray later and ask for forgiveness. However, real problems do require real solutions. And there are real situations that require real bankruptcy.
**writer apologizes for any misspellings as she relies totally on spellcheck but is too lazy to copy and paste**
Like anyone wants to take bankruptcy anyway. Just because you file chapter 7 bankruptcy doesn’t mean your money problems all just disappear. Better to avoid bankruptcy at all cost, even if God is okay with it.
I don’t think filing chapter 7 is a sin. The unfailing teaching of both the Old and New Testaments is that compassion, sympathy and fairness are to override purely economic concerns, such as loans.
The compassion as stated in the Bible, including the setting aside of lawful rights of lenders, was characteristic of economic relationships in the economy of early Judeo-Christian way of life. The central theme is one of stability—an established society with a promise of economic security to each family. Wealth was viewed as a blessing from God (Deuteronomy 8:11-18, 28). This blessing resulted from obedience and was based on God’s compassion. The tithing for the poor, the gleaning laws, the year of the Jubilee, were all tangible ways that Israelites could show compassion for each other and honor God by following His law. Beyond income-maintenance programs, the Biblical Law provided a permanent system—such as the Sabbatical year and Jubilee—to ensure that temporary misfortune barred no family from full participation in economic life.
As such, I do believe that chapter 7 isn’t necessarily a sin to file for. I’d just say that if someone does this, it should be something they should learn a lesson from, and try to avoid in the future. Nor should it be used as an instrument to escape debts through a scheme to defraud creditors, such as a case I heard of someone who would periodically file for Chapter 7 after running up debts to buy assets that then were put in his wife’s name, which then couldn’t be taken by creditors, at least under the bankruptcy laws of his state.
So therefore, I can’t say that filing bankruptcy is necessarily a sin in God’s sight. It depends on the circumstances, at least in part. I would maintain that someone should still try to pay something, especially when most credit card debts, etc., aren’t run up to put food on the table and avoid the worst kind of deprivation, which is described in Deuteronomy 15, but for luxuries and “wants,” not “needs.”
Sam
@Sam
The compassion, sympathy, and fairness were examples of how God’s people should behave as lenders. They also were not supposed to charge interest on their loans to their bretheren.
The difference here is that God was talking to the Lenders in this situation. As borrowers we can’t force lenders to obey what the Bible taught, we can only do what the Bible tells us (individually) to do.
And you are right, there very well could be circumstances where it could be okay. That is between that person and God. But based on on the scriptures I see I think it is pretty clear that He wants us to pay back what we owe.
Your comments about the Bible and Bankruptcy caught my attention. I read the post with eagerness. I appreciate, and agree, with the thoughts you shared. I decided to do a larger Internet search on this issue. Wow, you won’t believe the law firms across the country that have “The Bible and Bankruptcy” on their Web sites. I guess lawyers must get asked about Christians and bankruptcy alot. What I found interesting was the emphasis on these lawyer sites is on Old teachings about the Year of Jubilee and the cancellation of debts. Other law sites focus on Jesus’ words in the Model Prayer, “Forgive us our debts, as we forgive our debtors.” I could go on. Readers might want to do what I did and do an Internet search on the Bible and bankruptcy, and call up a few of these law firm sites and read their articles. It’s food for thought on this issue.
This is a good discussion, but the problem of bankruptcy is usually a result of financial problems that started many years before. The problem of getting into debt in the first place is the root problem and that is what needs to be addressed.
I think this still goes back to the heart of the issue. If someone has gotten into serious trouble sometimes there is no other option than grace, but its silly to make people who really do need to do this feel guilty and say its biblically wrong. Its a misuse of the Word of God. Of course bankruptcy should a last resort, those who misuse bankruptcy irresponsibly are wrong and make no mistake that God does deal with those who do so, however it is just not right to lump everyone in with that crowd…
@Gary
wow, I didn’t know that… and what they are using as their “selling point” - I don’t think is biblically correct.
With the year of Jubilee and forgiving of debts it has to be done by the lender. The borrower can’t make that happen - If that was the case, then all of us could walk into our bank and say our house is now paid off because we have had the mortgage 7 years - right?
I think this whole thing boils down to the fact that forgiveness of the debt has to be GIVEN, not TAKEN. If the lender decides to forgive the debt, then all is cool. But to me, from what I have found, it seems that Bankruptcy is TAKING it rather than receiving the debt forgiveness.
And again, just to reiterate, I am not talking about God’s forgiveness of this whole thing. I am referring to the lenders involved.
First of all great site and great post! I found this on PFblogs.org. I am in a mountain of debt myself but I have never turned to bankruptcy. ( I thought about it though.)
Through self-motivation, I managed to pay down $3000 out of $75,000 since April.
I also recently started going to church. It is interesting to hear the pastor preach about debt. Our church is going to hold some debt management classes in a few weeks. I think I will sign up and see what it has to offer.