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 wants us to do 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 not paying them what is owed.
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 or that other people get us 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 debt consolidation companies?
I would suggest trying to avoid them as well. That said, definitely do a debt consolidation rather than filing bankruptcy. But still avoid it if at all possible. The reason is that most of the debt 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 debt 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.
{ 30 comments… read them below or add one }
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.
What if your only creditor is the government? Technically it “forgives” the debt to itself through bankruptcy.
In our case, we have an outstanding balance of more than $75,000 with the IRS. Fifty percent of this is penalties and interest (we’ve been trying to work it out with them for nearly 5 years).
What do you think Bob? Is this a case where the creditor is able to forgive the debt in the way the Bible describes?
Interesting posts and the topic was well explained. One of the reasons the bankruptcy laws were changed recently is that there were too many people who were running up credit cards then filing. My husband and I have no debt at all and I have to tell you it is liberating! It took a while to get here too. It is a lie of the enemy to buy now and pay later…even purchasing a home costs a person three times (at least) the purchase price because of the interest. I realize that most of us couldn’t buy a home in today’s world in cash…not casting any blame here…just a fact about interest. I believe you are giving your word when you borrow and the Lord expects us to fulfill that promise to pay.
If it is biblical then you can’t argue with that. God cancels our debt as stated in Deuteronony 15 1-2. I know that God doesn’t want us feeling depressed and worthless because we get in debt that is a trick of the enemy), especially if it is not due to fault of our own,such as loss of income, loss of spouse…or both!!! I thank God that he is a forgiving God,and none of us are perfect. While bad debt may not be a area that all of us struggle in, there are areas that we ALL need help in. With the economy the way it is with the loss of jobs among other things, if you have been able to keep your house and maintain staying out of debt then that is great,but make sure that you don’t judge those who haven’t because there is only one judge and that is God,and no sin is greater than another or less than another. Bottom line if you are in debt then bankruptcy was given as a law by God to help cancel your debt,and if you aren’t in debt then pray for the ones that are. And always remember that if you are not in debt it is by the grace of God. All it takes is an illness, loss of income, loss of job, or some other misfortune and you too can be faced with financial hardship.
May God Bless You
i am an ex dancer.during my dancing days i accumulated a lot of debt and a 640.00 a month car payment.i did it fir like 4-5 years.i had a live in boyfriend who didnt care what i did.then this past year and a half,i met someone new.once i met him my desire to dance completely left me.
i left my old boyfriend.i moved back with my mom.i still danced.but i didnt want to.i knew God was teling me to get out.i was having bad dreams.so knowing i couldnt get a job making what i had made i knew i was going to have to go bankrupt.this past march i quit and i filed bankruptcy last week(ch 7)i have a new parttime job and am being supported by my new bfriend.now i know bankrruptcy isnt good but i wanted to take a step of faith and stop dancing.i wanted a fresh new start.i dont have anything to my name so the money i did make i spent it all.God didnt want me to have any $ from that job and i got into debt because of that job.so im looking at a new start where i tithe every week.Will God honor my decision to go bankrupt?i made poor chioces in my life.like many of us do.i am 31.thank you
Jan,
I am sorry to hear about your situation, but glad to hear that you are moving forward in your walk with God. You don’t need to feel guilty in any way at all – what’s done is done, just keep moving forward and continue growing in your knowledge of God and His principles…
Romans 8:1 – “Therefore there is now no condemnation for those who are in Christ Jesus.”
Let us not forget…that those same lenders also have the right to file bankruptcy and as we see today, they too are exersizing their right to file..the forgiveness of the lender is given when they are notified that one has filed bankruptcy then they no longer persue any legal avenue against you as a matter of fact they charge off the debt…
OOOPsss forgive me, i misspelled exercise….should be exercising…sorry!
Hi Bob,
I was reading the posts on this site and am wondering about the Lord’s feelings toward our situation. Four years ago my husband’s lawn care business failed due to a prolonged drought and it was a long time before he could find another job. We had debt that we could not pay on-credit and one loan. My husband was convinced by friends that bankruptcy was his only option. I felt that this was immoral and refused to discuss it. In the end he filed behind my back and nearly lost our house. The majority of our debt was shifted from his name to mine and we were in worse shape than before. Since then we have paid everything we could and I still hope that in the future we can repay those debts that were cancelled. We still have one persistent credit debt that we cannot get anywhere with since the debt collectors have hit us with such high interest. We have paid monthly for about four years and at the rate we are going it could take us up to 17 years to repay. We have a chance to refinance our mortgage and add that debt to the house which was our plan. Now the mortgage co. and the collection agency have made a deal between themselves to settle the debt at a lower amount. Is this wrong too? The bankruptcy was horrible and it took much healing in our marriage to overcome this. I still feel the guilt of making this mistake although I didn’t want it done. I have also repented of not supporting my husband although I knew he was wrong. I am so afraid of offending the Lord once again by settling on this debt and not paying back every penny. Things are still very tight for us and we don’t know what else to do. Do you have any advice?
Lisa T.
Lisa,
as I mentioned a few comments earlier – you shouldn’t feel guilty about the past. And like you mentioned if this was against your will I don’t know what you could have done differently. Even if you did do something wrong (like we all do) the BIble says that when we ask God for forgiveness He is faithful to forgive us of all unrighteousness. What’s done is done and if God has forgotten about it why should you be hanging on to it?
As far as the settlement, it is a bit of a gray area. No it isn’t as good as paying your balance in full, but it is a lot better than not paying it at all. Technically, the lender is saying that they are forgiving a portion of your debt – but they are generally “pushed” into this because they think it may be their best option for getting paid at all. I think you should pray to see what the Lord is leading you to do. But I will just throw this out there – if it were me and the financial situation was bad enough I would consider taking the settlement. Now, if I did that I would keep track of how much I owe each of the creditors and after my financial situation improved, I would still go back to those lenders and repay them what I owed them – preferably with interest. Even if it was 5 years later – imagine what kind of witness that would be to those lenders.
Either way, in the meantime, I encourage you to go to the library and borrow Dave Ramsey’s TOtal Money Makeover – it truly is a lifechanging book and I think it would be very helpful for you and your husband…
So I want to make sure I understand why this verse was posted.
Psalm 37:21
“The wicked borrows and does not pay back, but the righteous is gracious and gives.”
I am to conclude that if you borrow and are unable to repay, I did not say unwilling to repay, that you are wicked. Is this correct?
Then I must conclude that every Christian in the world today and in the past is and was completely able to repay any and all debts they have ever acquired? Right?
When the credit card companies lend, they know a bankruptcy law exists. Pay it back within reason; if you can’t, file bankruptcy and move on. Millions of Christians have, and will.
Although I appreciate stumbling upon this article. Please be aware that the bible also tells us that we are under the law and should abide by it.
The repercutions of dept and bankrupcy are an enormus burden to us.One i sometimes feel i can no longer carry.I spend sleepness nights worrying about it. things went hiorribly wrong 5 years ago when i was forced to split from my then spouse. this in turn started an avalanch of dissasters. from loosing my family home , my children due to the separation, then the death of my dad and then my mum.was not in a good place then after all that to put it lightly… this again in turn had a huge impact on my business having lost all my staff when they walk out on me . 1 of them whom was related to my ex wrongly convinced them that i had instigated the split.how much more can a man take. i kept saying to god.!!!!! this resulted in me fighting back to try to keep my business afloat and turn things around. i must emphasise that thru all this i was a christian, and will always be . Correct me if im wrong but i felt i was under attack by the enemy and so emerst myself into my faith that`s got me through thus far. even tho the dispair got me suiacidal on occations, sorry cant spell. lol. the fight to keep my business and my now home meant i had to borrow to help short term until i managed to sell. well that didn`t work either. borrowed 50 k through credit cards, loans .ect . had 4 potencial buyers who all cost me money over the 5 years of desparately trying to keep things afloat still believing that god will rescue me from this demonic attack on my life and well being.well bankruptcy was my only option.i then believed it was a godsent it seemed the only way. now christians out there please tell me where iv gone wrong and pray for me cause i`m now getting evicted from my home again cause the person whom we share a house with refuses to pay his share of the rent , is there no end to my missery. x x
Jesus sacrificially paid for our debt of sin, a debt that was too big for us to pay.
God’s word, the Bible, provides debt relief and debt forgiveness laws (Deuteronomy 15:1-2) as well as miracles in the financial realm (2 Kings 4:1-7).
Pay your debts if you have the means to do so (Psalms 37:21).
However, if you are unable to pay your creditors, then you need to decide whether or not to file for bankruptcy relief. Such decision requires wisdom. The LORD promises to liberally and gladly provide such wisdom to those who pray for such wisdom (James 1:5-7). Further, seek advice and input from godly people you trust (Psalms 1:1).
You said,
“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.”
I had a credit score of 720 before filing bankruptcy. Until I contracted a benign brain tumor, I was able to work every day of my life for 30 + years, and my credit card balances were manageable. As the surgeries, radiation, and doctors bills came I tried my best for 2 years to make arrangements, and even negotiate with my creditors but to no avail. I had no choice but to file bankruptcy when my wife had to take a lower paying job just to be closer to home and help me through this health situation. We didn’t feel we had committed a sin by doing so. We have by no means, made a windfall by not having to pay our debts back that were discharged. We are able now to make ends meet and still be of service to God through our church. So far, God has blessed us with my tumor not going malignant and I am thankful to be alive. Although it has left it’s mark on my life through deafness, and vertigo, I too am willing to pay my debts back if only I could. I believe that I am in God’s Will for my life and he has given me this “thorn in my side” that I have to “run the race” with. Be sure that I understand “All things work together for the Good to those who love the Lord”.
I strongly believe that one should pay back what is owed to another, especially if it has been borrowed.
However, I believe that bankruptcy is stigmatised and looked down on for a reason; in this world system, which does not use GOLD or Silver as MONEY but negotiable instruments and clever accounting exercises; the question that should be asked is: if there is no ‘MONEY’ no gold or silver backed currency to clear a debt, what can you pay a debt with? What is backing the currency today that gives it any value at all?
Hense Bankruptcy laws were established to tackle this issue.
Now there are remedies to solve the problems of debt that exists, but as the writer of this particular proverbs confirms: In all of your getting, get understanding (prov 4:7).