What does the Bible teach about
going bankrupt or filing for bankruptcy?

What does the Bible teach about
going bankrupt or filing for bankruptcy?

Q. What is the Bible's view on filing for bankruptcy?

(Submitted by: D. C.)

A. There are basically two principles that come up here, which admittedly are somewhat in tension. (Not that G.K. Chesterton would mind that, but that's another story!)

On the one hand, Christians should keep their promises, and pay creditors what they owe. This is part of the general principle of the ninth commandment:

"Thou shalt not bear false witness against thy neighbour. " (Exodus 20:16)

Similarly, there's Numbers 30:2, which concerns (obviously) vows to God, but I believe it's fair to apply this in principle to debtors paying creditors their debts back:

"If a man makes a vow to the Lord, or takes an oath to bind himself with a bind obligation, he shall not violate his word; he shall do according to all that proceeds out of his mouth."

Yet on the other hand, God is well aware of poor people who couldn't pay back what they owe. The loans they got were really gifts by the creditor to the debtor in poverty. Notice the law under which debts were completely cancelled every seventh year in a seven year cycle that lead up the to Jubilee year in the 50th year, which is stated in Deuteronomy 15. It's considerably longer than just verses 1-2, but I'll just quote that part here:

"At the end of every seven years you shall grant a remission of debts. And this is the manner of remission: every creditor shall release what the has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the Lord's remission has been proclaimed."

Hence, God recognizes how people in poverty can get so buried in debt they can't ever be freed by their own efforts. Similarly, God freed the slaves every seventh year who had entered slavery (at least often) because they couldn't pay their debts.

So the way I'd consider these two principles is that a person should strive to pay back their debts. If they can't pay them back, such as meeting the minimum monthly payments on credit card bills even after cutting back at home (such as moving to a cheaper apartment or house, giving up a car and/or getting cheaper ones, eating out much less, etc.), then it's time to file for Chapter 13 (Chapter 13 and Chapter 7 are types of bankruptcy that can be filed in the U.S.A), which would require a person to pay back some of their debts. But if things really are hopeless, then Chapter 7, which wipes out all debts, 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." One or two pairs of shoes is a "need." Ten or twenty pairs is obviously a "want."

Answer Given By: Eric Snow